Google's parent firm, Alphabet (GOOGL), posted solid second-quarter earnings this week, exceeding analyst estimates for revenue and earnings per share.
Alphabet's Top Performer: Cloud Business
According to a recent report, Alphabet's revenue was $84.7 billion, 14% higher than a year ago and above the analyst's expectation of $84.3 billion.
On the earnings side, the EPS came at $1.89, exceeding analysts' projection of $1.85, indicating a 31% rise over last year.
In the top-performing segment, the cloud business was in a strong position, generating an operating profit of more than $1 billion. In particular, the revenue from the cloud business came at $10.35 billion, higher than the expectation of $10.10 billion. Also, the number was greatly increased from the $8 billion recorded in Q2 2023.
Alphabet's Presence in AI
Despite the upbeat earnings report, there is a significant money outflow in the research and development phase. In Q2 2024 the company invested over $2.2 billion in Artificial Intelligence (AI), which is higher than last year's $1.1 billion. While the exact timetable for AI to create major revenue for Google Cloud or its ad business is unknown, the company is making significant progress in this critical technology.
On the other hand, Alphabet's key competitors, Microsoft (MSFT) and Amazon (AMZN) are also seen to expand their presence in AI capabilities and cloud infrastructure. All three corporations compete for a larger part of the lucrative cloud market.
GOOGL Stock Forecast Technical Analysis
According to the daily price of Alphabet stock (GOOGL), the post-earnings sentiment was bearish as the price showed a decent recovery from the 191.73 top. A selling pressure is visible below the 20 day Exponential Moving Average, suggesting a short-term profit taking. Also, a bearish daily candle has formed below the high volume line since March 2024.
Based on this outlook, the ongoing selling pressure might find support from the 100-day Simple Moving Average line, which is at the 166.07 level. Moreover, the 50% Fibonacci Retracement level from the current swing is at 161.29 level, which might work as a secondary target for the current momentum. However, an extended selling pressure below the 161.00 level could signal a buying possibility as the 153.86 level is acting as a crucial event level.
In that case, a bullish reversal from the 150.00 to 162.00 zone with a daily candle above the 20-day EMA could signal a valid buying pressure, targeting the 196.00 level.
