A stock that typically never goes on sale, shares of technology giant Alphabet Inc. (NASDAQ:GOOG), parent company of Google, have provided investors with the first meaningful dip in a while. The stock has recently fallen below the $1,200 U.S. per share level, a level I promised myself I would consider jumping into this stock. Here's why Alphabet stock is still on my watch list, for now at least.
The key driver of Alphabet stock price in recent years has been growth in online advertising from more "traditional" media advertising platforms. There continues to be significant reason for near-term concern in the sector. The cyclical nature of advertising will likely be a serious headwind for Alphabet in the near-term, and potentially the medium-term as well. Companies will be forced to cut back on ad balance sheets in these volatile times.
I personally don't think the appropriate level of bearishness on the company's advertising revenue is being factored into Alphabet stock price. I could actually see this stock dropping down to the triple digits in short order.
That being said, Google's position as a leader in cloud computing provides a strong thesis for growth in the short-, medium- and long-term. I do see Alphabet’s cloud business growing to become a larger slice of the company's profit pie, and as such, remain very interested in picking up a position in GOOG.
I do expect more near-term downside related to the company's aforementioned online advertising business, but would be a buyer around $$900 U.S./share.
Invest wisely, my friends.
