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Is Google’s Stock (NASDAQ: GOOG) Undervaluing Their AI Position?

Analyst Team trader
Updated 24 Jun 2024

Alphabet stock (NASDAQ: GOOG) holds weight in the portfolios of many savvy investors, and for good reason. With a market cap of $2.2 trillion, there is almost 50% in gains for GOOG to catch up to Microsoft, Nvidia, or Apple. Is Google's potential growth in the artificial intelligence (AI) sector being undervalued?

Under the leadership of CEO Sundar Pichai, Alphabet's management approach is known for being efficient and community-focused, balancing profit motives with employee and societal interests. This style has underpinned Google's stature as a leader in AI, with major breakthroughs in machine learning and natural language processing since acquiring the AI research lab DeepMind in 2015.


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Nonetheless, competition in the AI arena is fierce, with major contenders like Microsoft, Amazon Web Services (AWS), and Meta Platforms (formerly known as Facebook) contending for leadership. Although Alphabet's growth rates are currently lower than some of its competitors, the company's robust financial management, consistent generation of free cash flow, and diversified portfolio bode well for investment security.

Current valuation models, including the discounted earnings approach, suggest that Alphabet is undervalued. The analytical forecasts reveal considerable earnings growth in the near future largely attributed to the efficient utilization of AI and robotics.

Despite these challenges, market analysts are confident in Alphabet's ability to uphold its AI supremacy. The balance between operational stability and prospective expansion makes Alphabet an attractive enterprise, securing its relevance and leadership in the transformative landscape of AI technology for the foreseeable future.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.