Following the last bell on October 29, Alphabet - A (GOOGL), the parent business of Google and YouTube, is scheduled to release its earnings. The business is currently in a challenging situation. Revenues have never been larger, on the other hand. However, it faces a barrage of rivals from artificial intelligence (AI) entrepreneurs and is currently embroiled in several monopoly litigations.
Is Google's Monopoly Over?
For many years, start-ups and investors believed that Google Search was unbeatable. The company had an enormous battle chest to drive out any small opponents and a virtual monopoly in internet search engines (more than 90% market shares).
Everything changed with the release of ChatGPT by OpenAI. With its sophisticated model of language and search capabilities, ChatGPT rapidly reached more than 100 million users thanks to funding from Microsoft, Google Search's main rival.
As a result of this expansion, numerous other start-ups have emerged in an attempt to challenge the search monopoly. With an approximate 90% market share throughout all platforms, Google has so far done a respectable job of holding onto its market share.
On desktops, though, where Microsoft possesses an OS benefit and is forcing users to use the Bing/ChatGPT search tool, it is slipping a little. On desktops, Google's revenue share is believed to have dropped to less than 80%, though this market category is becoming less significant each year.
Legal Threats On Google
The US Department of Justice (DOJ) is also pursuing charges against Google in an effort to end its monopoly. Depending on the outcome of the legal proceedings, it hopes to prevent its distribution transactions to businesses such as Apple, which use its data to establish a monopoly and to foster opposition in search-based content advertising.
It's simple to stop funds from being sent to Apple, but the DOJ's implementation of these additional remedies is unclear.
Google's Cloud: A Revenue Generator
Google Search is the main driver of Alphabet's general revenue and profits, which continue to soar despite recent headlines and concerns about competition. Revenue from Google Search increased to $48.5 billion in the previous quarter from $42.7 billion during the same time last year. The financials have not yet revealed whether or not Google is facing competition.
Google Cloud is Alphabet's division with the fastest rate of growth. The increasing need for artificial intelligence solutions necessitating massive cloud spending is a huge boon to the cloud facility provider. Last quarter, categorized revenue reached $10.3 billion, a 29% over the past year increase. That's more than $40 billion on an annual basis. The quarterly earnings of Google Cloud were barely $3 billion in 2020, just a couple of years ago.
The division is also becoming significantly more profitable as it grows. Last quarter, Google Cloud's revenue from operations exceeded $1 billion. Within the following five years, Google Cloud will easily eclipse $100 billion in revenue, thanks to the overall tailwind from the shift to cloud computing. This once-tiny dividing of the Alphabet empire could generate $20 billion in future revenues annually if profit margins can increase to 20%.
GOOGL Stock Forecast Technical Analysis
In the daily chart of Alphabet- A, the price is trading sideways after having a massive selling pressure from the 191.79 top. However, a bullish V-shape recovery is visible from September, which needs a proper validation before anticipating a bullish reversal.
The 200-day Simple Moving Average is working as major support, which is in line with the 50-day EMA. As both short—and long-term traders anticipate a bullish trend, a valid breakout above the high-volume line could trigger the point.
Based on the daily outlook of GOOGL stock price, a valid bullish reversal with a daily close above the 169.12 level could open a potential long opportunity, aiming for the 191.79 resistance level.
On the other hand, a failure to hold the price above the 200 day SMA could be a potential bearish sign. In that case, a daily close below the 154.79 level might lower the price towards the 140.00 area.
