You probably also use the services of Alphabet from time to time when searching the Internet or enjoying music or videos on YouTube. The parent company of Google presented its Q4 figures on 30.01.2024, which led to a drop in share prices. Let’s take a closer look at whether the Alphabet share will continue to be interesting.

Skeptics view AI investments critically The weaker advertising revenues and the necessary investments in the field of AI caused disappointment after the presentation of the quarterly figures. Skeptics point to the increased costs that Alphabet must bear for the use of artificial intelligence. The company is under pressure due to the AI hype.

Encouraging development in cloud and margins The skepticism towards AI investments has overshadowed the encouraging cloud activities and the better-than-expected margin development. Alphabet still has a strong market presence in the areas of digital advertising and cloud computing. The recent innovations in artificial intelligence are expected to help the company expand its share in both areas. According to Statista, Alphabet leads the digital advertising market with an estimated share of 39%. The dominance in this area is due to the company’s ability to connect internet users and data through web platforms such as Google Search and YouTube.

Language model Gemini to surpass ChatGPT Google has been working on applications based on artificial intelligence for years. In the AI race, Google wants to take the lead with its new language model Gemini. The AI system is even expected to surpass the GPT4 language model of competitor OpenAI (ChatGPT). Gemini can not only generate texts in a chatbot, but also solve problems and make situation-dependent decisions. The system is also able to process information from photos and videos. Google CEO Sundar Pichai believes that the transformation we are currently experiencing with AI will be „the most profound in our lives, far greater than the transition to mobile phones or the internet before that.“

Alphabet share in weekly chart – ISIN: US02079K3059

Source: https://www.aktienscreener.com

Technical view The stock of the search engine giant has formed a cup formation in the last two years, as we can see from the purple line. Before a breakout to the upside from such a formation, a consolidation is often observed (a so-called handle is formed). If this is the case, we would be dealing with the chart formation „cup-with-handle“. This trend-following formation has a good risk-reward ratio. A sustained breakout above the cup rim (orange line) would trigger a technical buy signal.

Conclusion With its generative AI model Gemini, Alphabet has good cards to further expand its leadership role in the search engine sector. From a technical perspective as well, the chances are not bad for a dynamic continuation of the trend. For you, this means: pullbacks are buying opportunities!