I’ve been relatively skeptical toward Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) stock for some time now, and as such have missed out on the big run in GOOG stock. While Alphabet stock has been mostly range-bound since late October, it has made some progress. With all that said, I still see reasonably significant risk to Alphabet stock going forward. And recent developments, including what looked like a Q1 earnings beat, seem to highlight, not minimize, that risk. Higher clicks, which rose 59% year-over-year in the quarter, have offset those pressures, allowing Google profits to grow. But if that usage growth decelerates, Alphabet earnings could also decelerate — and sharply. And that deceleration could come from higher app usage, an entry by Amazon.com, Inc. (NASDAQ:AMZN) into the ad industry, and/or lower growth in YouTube viewership. In fact, at the risk of focusing on round numbers, the $1,000 level which has provided support actually looks about like fair value to my eye. But I’m not sure it leaves much room for upside. Unless Alphabet finds a big winner in Other Bets, or the advertising business finds another gear, earnings growth likely will slow. And if that’s case, I’m not sure how much higher GOOG stock can really go. As of this writing, Vince Martin has no positions in any securities mentioned.
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