Google’s 50% Rally Is Sanctified By The Righteousness Of Fundamentals

Jul. 28, 2023 7:15 AM ET Alphabet Inc. (GOOG), GOOGL

Summary

• Google’s 50% gain in 2023 is one of the few mega-rallies sanctified by the righteousness of fundamentals.
• GOOG is growing at almost 20% per year and is expected to generate more than $700 billion in free cash flow by 2028.
• It’s expected to repurchase almost $500 billion in stock and end 2028 with more than $500 billion in cash. This is a profit minting machine that won’t quit.
• GOOG is still 16% undervalued and has 55% consensus fundamental justified upside potential by 2025.
• If GOOG grows as expected and returns to fair value by 2029, it could potentially triple in value, and possibly beat the S&P consensus return by 400%.
• I am Dividend Sensei, aka Adam Galas — an Army vet and trained stock analyst. I run the investing group The Dividend Kings where I teach members how to invest more wisely in dividend stocks.

Google’s dominance in the cloud computing industry is also highlighted, as it is one of the major players in this rapidly growing sector. The company’s cloud sales are expected to grow by 21% annually through 2028, outpacing its overall sales growth rate of 10%. The author praises Google’s potential to reshape the global economy through its advancements in artificial intelligence (AI).

The article presents consensus estimates that show Google’s long-term growth prospects look promising, with expected growth in sales, free cash flow, EBITDA, and net income over the coming years. Additionally, the company is anticipated to maintain a significant cash reserve, even after spending around $500 billion on share buybacks, indicating a robust financial position.

The valuation analysis indicates that Google’s stock is undervalued by about 16%, which the author believes makes it an attractive investment opportunity. The article suggests that Google could outperform the S&P 500 index by a wide margin, potentially tripling in value by 2029.

However, the author acknowledges that investing in Google comes with certain risks, including regulatory threats, competition in market share, and potential disruptions from emerging technologies. Despite these risks, the article concludes that Google remains a strong buy due to its impressive long-term growth potential and relatively low risk compared to other investment options.

Title: Google’s Path to Profitability and Growth Fuels Investor Optimism

Summary: The article “Google’s 50% Rally Is Sanctified By The Righteousness Of Fundamentals” explores the underlying reasons behind the remarkable 50% rally in Alphabet Inc. (Google) stock during 2023, emphasizing the company’s solid fundamentals.

Google’s growth trajectory is a major driving force behind its impressive rally. The company is expected to achieve a nearly 20% annual growth rate, projecting to generate over $700 billion in free cash flow by 2028. With plans to repurchase nearly $500 billion in stock, Google is well-positioned to maintain a significant cash reserve of over $500 billion by the end of 2028, highlighting its capacity as a profit-generating machine.

In the competitive world of cloud computing, Google stands out as one of the major players. The company’s cloud sales are projected to grow at a remarkable rate of 21% annually through 2028, surpassing its overall sales growth of 10%. This strong performance in the cloud segment, coupled with Google’s advancements in artificial intelligence, positions the company at the forefront of technological innovation, with the potential to reshape the global economy.

Analysts’ consensus estimates reveal a positive outlook for Google’s long-term growth across various financial metrics. Sales, free cash flow, EBITDA, and net income are all projected to see substantial growth in the coming years. Moreover, Google’s prudent financial management is expected to leave it with a substantial cash reserve, even after extensive share buybacks.

The article presents a valuation analysis indicating that Google’s stock is undervalued by approximately 16%, presenting an attractive investment opportunity for savvy investors. With a potential to outperform the S&P 500 index by a significant margin, Google’s stock appears to offer long-term growth potential that could potentially triple its value by 2029.

While acknowledging certain risks, including regulatory threats and competition, the article ultimately portrays Google as a strong buy, offering excellent long-term growth potential with relatively low risk compared to other investment options.

Overall, Google’s solid fundamentals, impressive growth trajectory, and advancements in technology have led investors to rally behind the stock, making it one of the few tech giants whose gains are rooted in strong underlying fundamentals.

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