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Alphabet Inc Class C GOOG Stock Quote

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Morningstar‘s Alphabet Stock Analysis GOOG

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Is it the right time to buy or sell?

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Alphabet Q3 Misses Expectations As Macroeconomic Uncertainty Hits Ad Revenue; Shares Undervalued

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Alphabet reported disappointing third-quarter results as revenue growth decelerated further, driven by the stronger dollar and economic uncertainty, which is increasing hesitancy in ad spending. Assuming less uncertainty in the macroeconomic environment, plus the monetization of YouTube Shorts, we expect advertising revenue growth to return to double-digit levels in 2023. Unlike advertising, the cloud business maintained impressive growth. After adjusting our model, including lower top-line growth assumptions, we slightly reduce our fair value estimate of Alphabet to $160 from $169. The stock is down nearly 7% in afterhours trading and remains attractive.

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Key Statistics GOOG

Company Profile GOOG

Business Description

Alphabet is a holding company. Internet media giant Google is a wholly owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google’s other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone, and smart home products, which include Nest and Google Home, also contribute to other revenue. Alphabet’s moonshot investments are in its other bets segment, where it bets on technology to enhance health (Verily), faster internet access to homes (Google Fiber), self-driving cars (Waymo), and more. Alphabet’s operating margin has been 25%-30%, with Google at 30% and other bets operating at a loss.

1600 Amphitheatre Parkway
Mountain View, CA, 94043
T +1 650 253-0000
Industry Internet Content & Information
Most Recent Earnings Sep 30, 2022
Fiscal Year End Dec 31, 2022
Employees 186,779

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