GOOGL — long thesis
Thesis
Alphabet beat Q4 estimates with revenue of $113.8B (+18% YoY) and EPS of $2.82 (vs $2.65 est). Google Cloud revenue surged 48% to $17.7B, vastly exceeding the $16.2B forecast. Cloud operating income doubled YoY. Gemini app has 750M+ MAUs. Apple selected Gemini to power Apple Intelligence/Siri. Stock pulled back ~5% on $175-185B capex guidance (double 2025's $91.4B), creating opportunity. Trading at ~$323, down from $344 ATH. At under 30x forward earnings, it's the second cheapest Mag7 stock. 41 analysts have Buy consensus with avg PT $347-357. Tech sector is 16% undervalued per Morningstar. This is a diversification play adding a profitable AI/cloud name at reasonable valuation post-pullback.
Triggers
Entry: GOOGL at ~$323 has support from accumulated volume at $323.44. Buy $75-100 worth (~0.23-0.31 shares) if it holds above $317 support for 2 sessions. Ideal entry on any further pullback to $310-320. The post-capex-guidance selloff appears overdone given the strong Cloud and Search results. Ex-dividend date March 9 ($0.21/share).
Exit: Target $360-380 (12-18% upside) over 3-4 months as Cloud growth accelerates and AI monetization proves out. Take partial profits at $350. Stop loss at $295 (below January mid-month lows of ~$304).
Invalidation: Break below $295 on volume. Google Cloud growth decelerating below 30%. AI Overviews materially cannibalizing Search ad revenue. Antitrust ruling forcing structural remedies (e.g., Chrome divestiture). Capex spending failing to translate into revenue growth by Q1 2026 report (April 23).