Investors are optimistic about the potential for a bull market in 2024, particularly in light of certain patterns that tend to repeat over time. Following a rebound from a bear market, such as the one experienced in 2023, the NASDAQ Composite has historically surged an average of 19% per year since 1971. With this pattern in mind, savvy investors are looking for opportunities to capitalize on the expected market rally, and one potential option is tech giant Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).
Alphabet recently completed a massive 20-for-one stock split in July 2022, which significantly lowered the stock price to around $110 per share. The timing of this stock split was not without its challenges, as rising interest rates and concerns of a U.S. recession weighed on the digital advertising industry, which constitutes approximately 80% of Alphabet’s revenue. However, as inflation subsides and optimism builds around potential easing of the Federal Reserve’s monetary policy, these macroeconomic issues could fade.
While Alphabet’s stronghold in internet search remains solid, thanks to its robust algorithm and network effects, the company is also exploring new avenues for growth to diversify its business. One such opportunity lies in generative artificial intelligence (AI). Alphabet quickly responded to perceived threats by releasing its own AI capabilities, including Bard and Google search AI, leveraging its vast amounts of data and real-time internet search capabilities.
In December, Alphabet unveiled Gemini, its most powerful AI model, which will be integrated into its consumer-facing apps and licensed to Google Cloud customers for their own applications. This model has numerous potential use cases, from customer service bots to product recommendations and text summaries. In addition, Alphabet is investing in proprietary AI hardware, such as its TPU v5p chip, designed to train AI models at a cost-effective rate.
Investors are also attracted to Alphabet’s affordable valuation. Despite being a massive blue-chip company, Alphabet’s stock is currently trading at a discount with a forward price-to-earnings (P/E) multiple of 21, compared to the NASDAQ average of 29. This makes Alphabet an appealing choice for value-oriented investors who are looking to bet on a bull market in 2024, especially with the potential growth from its new AI initiatives and the anticipated easing of macroeconomic challenges.
In conclusion, investors are eyeing a potential bull market in 2024, and Alphabet’s stock split coupled with its investment in generative AI presents an attractive opportunity for those looking to diversify their portfolios and capitalize on the expected market rally. With an affordable valuation and promising growth drivers, Alphabet remains a compelling choice for investors seeking long-term value and potential returns.
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The source of the article is from the blog regiozottegem.be