Alphabet Still Has Ample Room To Grow

Oskar Hartmannov
Tuesday 14 June 2022
Last Updated 2022-07-06T17:49:59Z

Alphabet Inc. (GOOGL) Is Attracting Investor
Alphabet (GOOGL) has recently been on Zacks.Com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future. Shares of this internet search leader have returned +3.8% over the past month versus the Zacks S&P 500 composite's +0.1% change. 

The Zacks Internet - Services industry, to which Alphabet belongs, has gained 1.3% over this period. Now the key question is: Where could the stock be headed in the near term? Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. 

Earnings Estimate Revisions Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock. 

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. 

A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

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