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GOOGL stock: 3 good reasons to buy Alphabet while it’s on sale


  • Alphabet (GOOG, GOOGL) has put investors under pressure recently, but that puts it at an attractive price.
  • GOOGL stock has plenty of money, and the upcoming stock split could add to the excitement.
  • It seems like the perfect time to jump into Alphabet’s stock.

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When it comes to nuts and bolts, what’s there really to say about Alphabet (NASDAQ:GOOGNASDAQ:GOOGL) stock these days?

Arguably the most powerful tech company in the world, Alphabet is falling along with the rest of tech stocks this year as the market correction threatens to turn into a full-fledged bear market. GOOGL stock is down 28% year-to-date, including a 13% drop last month.

If you like investing in big tech stocks, the drop was downright painful. But really, it could be much worse.

GOOGL stock isn’t even the worst of FAANG’s legendary stocks – FAANG being an acronym for the biggest tech growth stocks in the market. netflix (NASDAQ:NFLX) is the worst of this lot, dropping nearly 70% so far in 2022.

So there is Meta-systems (NASDAQ:Facebook), which is down about 47% since the start of the year. And Amazon.co.uk (NASDAQ:AMZN) is sitting on a loss of 38%.

Alone Apple (NASDAQ:AAPL), which is expected to have a huge year this year with the rollout of its new iPhone SE with 5G capabilities, is currently outperforming GOOGL stock, with only a loss of 22% over the year.

Alphabet’s first-quarter earnings were disappointing. Alphabet posted revenue of $68.01 billion, less than the $68.11 billion expected by analysts. Earnings per share were also highlighted, at $24.62 per share versus $25.91 per share expected by the street.

Google Cloud’s revenue was decent at $5.82 billion versus $5.76 billion expected by analysts. But YouTube’s revenue really dragged down profits, as analysts expected $7.51 billion and it could only manage $6.87 billion.

Chinese platform ICT Tac becomes a huge problem for YouTube. YouTube launched a product called Shorts to compete with TikTok, and said Shorts had more than 30 billion daily views by the end of the first quarter. That’s four times more views than a year ago.

3 reasons to appreciate GOOGL stocks

So there are challenges. But there are still three good reasons why I like GOOGL stocks here.

Alphabetical stock is on sale. That’s right. Alphabet is a comparative business, and part of investing is finding strong companies that are undervalued and buying accordingly. Alphabet has a reputation as one of the best stocks in the market and nothing has fundamentally changed in the company to make it a loser.

He has a growing cloud business. It has literally cornered the US web search market with its Chrome browser, and it’s getting the lion’s share of advertising dollars. And it has a strong smartphone platform with its Android products.

The stock split. Stock splits are great for business, and Alphabet is planning a 20-for-1 stock split later this summer. The split means anyone who owns a single GOOGL share will see it replaced by 20 shares.

This is important because it makes the stock more accessible to retail investors. It’s much easier to put put options on a stock valued at less than $200 than when the stock is above $2,000 — and the extra liquidity doesn’t hurt. More people trading GOOGL stocks means the price is more likely to rise, especially when market sentiment once again turns in favor of tech stocks.

Google cash reserves. Alphabet had about $139 billion in cash at the end of the year. This gives him the ability to do just about anything he wants, including acquiring a new business. He might invest in a new line of products to earn money later. Or it could just sit on its cash, take advantage of higher interest rates, and see a roughly 4% increase in profits this year.

Each of these options is a great reason to like GOOGL stock at this point, even if the stock market is pushing Alphabet down.

The essential

Alphabet is literally on sale right now. Can you get it at a cheaper price if you wait a few weeks? Perhaps. But in a year or two you’ll look back and wishing that you had jumped on board GOOGL stock at those prices.

As of the date of publication, Patrick Sanders held a long position in the AAPL. He had (neither directly nor indirectly) any other position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 he led the investment advice section at US News & World Report. Follow him on Twitter at @1patricksanders.



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