Google parent company Alphabet Inc‘s shares have seen better days. The stock has plummeted 35% from its all-time highs, landing it squarely in bear market territory.
Among the tech giants, Alphabet’s downturn is more severe than most, leaving investors wondering if it’s time to buckle up for a rebound or remain cautious.
Alphabet Stock In Deep Bearish Waters
Technically speaking, Alphabet stock is deep in bearish waters. The stock is trading below its five, 20- and 50-day exponential moving averages (EMAs), signaling a strongly bearish trend. However, a bit of buying pressure suggests a potential future turnaround.
The share price sits at $157.53, slightly above its eight-day simple moving average (SMA) of $153.17, flashing a bullish signal in the short term. Still, with the stock below its 20-day SMA of $159.68 and the 50-day SMA of $168.01, the broader picture screams bearish.
The 200-day SMA at $157.08 is almost in sync with the stock price, with the stock having traded below this average over the recent past.
Why Are Google Stock Investors So Bearish?
So, what’s making Alphabet investors and traders so bearish?
For starters, the U.S. Department of Justice slapped the company with an antitrust lawsuit, with Europe not far behind in its own antitrust cases. This regulatory scrutiny leaves investors anxious about potential penalties that could weigh heavily on the stock.
And let’s not forget the colossal AI spending spree. Alphabet, along with other tech titans, is pouring massive amounts into AI development, which, while promising, is putting a strain on short-term capital efficiency.
Is Alphabet Poised For Comeback?
So, why bet on an Alphabet comeback?
For one, its balance sheet is still rock solid. Revenue has been growing at 18.16% annually, with EPS climbing 21% over the last five years, buoyed by aggressive share buybacks. Minimal debt, healthy cash reserves, and the recent introduction of a dividend sweeten the deal for long-term investors.
Once Alphabet navigates these antitrust hurdles and trims its AI-related capital expenditure, it could return to its former capital-efficient glory, making the stock ripe for a rebound, over the long term.
The short-term continues to look grim for Alphabet stock.