with artificial intelligence With the (AI) boom in full swing, investors continue to look for ways to get in on the action. Fortunately, you don't have to look that far.
alphabet (NASDAQ:GOOG) (NASDAQ:Google)The company, one of the world's most powerful companies, is at the forefront of this revolution. The stock price continued to rise after the company announced its financial results for the first quarter of 2024, which were well received by the market. In the last 12 months alone, he's up 59%.
This leading internet company is currently valued at over $2 trillion. Let's take a closer look at its recent financials, attractiveness, and stock valuation.
Looking at the latest results
Wall Street likes to focus on headline numbers like sales and earnings per share. Alphabet shattered expectations here. The highest amount was $80.5 billion, an increase of 15% from the previous year. Final profit he increased by 62% to a total of $1.89 per share. This is just the latest report demonstrating the company's ability to maintain strong underlying performance.
All of Alphabet's divisions performed well. Ad revenue increased 13% due to strong results in search and YouTube. Considering the advertising industry's struggles in 2022, this is a very encouraging trend. These days, the advertising market is on much better footing.
But what makes Alphabet a great AI stock is its Google Cloud division. This segment already offers clients a vast list of AI capabilities in areas such as generative AI, machine learning, images and video, data, and consulting. Google Cloud saw its revenue increase by 28% in the first quarter. Operating income It's becoming a $900 million leading AI infrastructure provider.
so many positive qualities
It's no surprise that Alphabet needs some very attractive qualities to reach its current valuation of $2 trillion. One factor that cannot be ignored is the strong long-term tailwinds that have worked in the company's favor.
Of course, the rise of smartphones and the internet over the past decade has turned Alphabet into the so-called gateway to the internet. As Internet usage increases and the number of Internet users increases accordingly, the ability for businesses to monetize this activity through advertising increases. And the popularity of streaming video has turned YouTube into a global entertainment powerhouse.
Returning to AI, there may be no business better suited to take advantage of this technological advancement. First, Alphabet has unparalleled financial resources with $95 billion in net cash on its books and consistent free cash flow generation to invest heavily in research, development, and launch of AI tools. This helps the company's operating margins average an impressive 26.2% over the past five years.
But perhaps even more noteworthy is that Alphabet offers numerous products and services used by hundreds of millions, even billions, of people. This gives businesses a valuable avenue to release customer-ready AI capabilities, further increasing revenue potential.
Evaluation remains convincing
Investors will likely be surprised to learn that the stock still looks cheap, even after its recent rally.Stock trading is forward price earnings ratio Only 22.2.
If you decide to pay this valuation, you have a world-leading company that is incredibly profitable, has growth potential, is at the forefront of AI, and owns some of the world's most popular services. You're going to get one of the companies. It also doesn't hurt that Alphabet just announced a new $70 billion stock repurchase program and that the company will now pay shareholders a quarterly dividend of $0.20.
Investors should still consider buying Alphabet stock, even though it's currently in the $2 trillion exclusive club.
Should you invest $1,000 in Alphabet right now?
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Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Neil Patel and his clients have no positions in any stocks mentioned. The Motley Fool has a position in and recommends Alphabet. The Motley Fool has a disclosure policy.
This epic artificial intelligence (AI) stock is now in the $2 trillion club Original article published by The Motley Fool
