Google’s current growth story, like its other big tech peers, will center around artificial intelligence (AI) as its main protagonist. Short-term questions also remain, but it creates an opportunity for traders to play the stock regardless if it heads up or down.
As mentioned, the AI theme should give bullish vibes to Google’s stock and offer the $2 trillion company an aspect of growth to pair alongside its fundamentals. However, AI can also present regulatory challenges, as a Morningstar analysis mentioned. Furthermore, a clearer pathway to success in AI may be necessary to convince more analysts that its AI ambitions are on track.
“We view Alphabet’s current price dislocation as resulting from concerns about AI impacting search and antitrust,” Morningstar noted. “While antitrust is out of management’s hands (and they won’t comment on active cases on an earnings call), the firm could provide more clarity on how they’re planning to monetize AI.”
Nonetheless, the long-term trend is again promising. Google’s continued investments in AI should hopefully bear fruit. And its current operations, such as advertising revenue, should sustain its position in the search engine sector.
From a fundamental standpoint, the search engine giant is also looking strong. Cash is king, and one thing is for certain: Google has plenty of it.
“We view Alphabet’s financial position as virtually unassailable,” Morningstar mentioned. “The firm closed out 2023 with cash and cash equivalents of $111 billion, more than offsetting its debt balance of $13 billion. The firm’s advertising business is a cash-generating machine, churning out tens of billions of dollars in free cash flow annually.”
Given the growth potential and fundamentals, the default position might be to stay bullish, but flexibility is key.
2 Ways to Trade Google
Whether it’s because of the rapidly changing 24-hour news cycle, macroeconomic environment, earnings reports, or other information, it’s best to stay flexible when it comes to trading Google’s stock. On that note, single-stock ETFs allow for this flexibility with two products from Direxion: the Direxion Daily GOOGL Bull 2X Shares (GGLL ) and the Direxion Daily GOOGL Bear 1X Shares (GGLS ).
GGLL allows traders to maximize their profit potential to Google stock by allowing 2x exposure. GGLS, on the other hand, allows traders to hedge against any downside in Google’s stock to potentially limit losses on a bullish position or even profit from the downtrend on a single position.
View Direxion’s full roster of ETFs to see how it can benefit traders from a sector or single-stock perspective.
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