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Alphabet Inc. (GOOG) isn’t looking too hot right now. As of September 10, 2024, the stock has slumped, hovering around $150 per share—far below its peak of $193 earlier this year. That’s a 22% drop from its highs! If you’re an investor, this might feel like an ugly wake-up call. But what exactly is going on here, and why does Alphabet still have a glimmer of hope?

Alphabet is a titan in the tech world. But in 2024, it’s been battling a combination of legal challenges, rising competition, and a cautious market. There’s no sugarcoating it—this has been one of the toughest years for the company, with regulatory issues adding to the pain. But the question isn’t just why Alphabet is down; it’s whether this is an opportunity in disguise for investors. In this post, I’ll dive into the legal drama, Alphabet’s AI future, and whether the stock's current state signals a major buying opportunity or a sign to stay far away.

1. Legal Headwinds and Investor Panic: Why GOOG is Falling

The single most frustrating reason behind Alphabet’s stock plunge? Regulation. Over the last few years, Alphabet has been locked in legal battles, but 2024 has seen the stakes raised to new levels. The Department of Justice (DOJ) has decided that enough is enough and has launched a lawsuit aimed at dismantling Alphabet’s online advertising dominance. If that wasn't enough, Alphabet got slapped with a $2.7 billion fine by the European Union for antitrust violations​.

These legal issues aren’t just legalese— they’ve spooked investors. The company’s advertising business, which rakes in more than 80% of Alphabet’s revenue, is under threat. This is core to what Alphabet does, and if the DOJ succeeds in breaking apart this business, Alphabet’s entire revenue model could shift. Just think about it—Alphabet’s control over digital ads is massive, and breaking it up could mean that we see a dramatically different Google in the next few years.

Investors hate uncertainty, and with no quick resolution in sight, they’ve hit the "sell" button. The sell-off has only been exacerbated by whispers about how long these legal battles might drag out. And with Alphabet losing billions of dollars in market cap, it’s understandable why many are jumping ship.

2. AI: Alphabet’s Not-So-Secret Weapon for a Comeback

If there’s one reason Alphabet could turn things around, it’s artificial intelligence (AI). Yes, AI isn’t exactly new, and yes, every company seems to be shouting about it, but Alphabet is uniquely positioned to dominate this space. While other companies are talking about AI, Alphabet has been building it into the very foundation of its services for years.

Let’s talk numbers. Alphabet’s revenue is expected to hit $357.8 billion in 2024, a 16.4% increase from 2023​. A huge chunk of this growth is expected to come from Google Cloud, which has emerged as a serious player, particularly because of its AI-driven offerings. The Cloud division pulled in nearly $10 billion in revenue in Q2 alone, marking double-digit growth, and more importantly, it’s becoming profitable.

But here’s the kicker: Alphabet’s AI play isn’t just limited to the cloud. Google Search, arguably the company’s crown jewel, has integrated AI to provide more nuanced, contextual search results. The Bard AI, Google’s answer to ChatGPT, is already embedded in multiple products, from search to productivity tools like Google Workspace.

Despite all the legal chaos, AI is Alphabet’s ace in the hole. While competitors like Microsoft, Amazon, and Nvidia are formidable, Alphabet’s extensive AI infrastructure, combined with the real-world applications of AI across its ecosystem, gives it a significant edge.

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3. Why Alphabet is Still a Buy: Digging Into the Fundamentals

Now, I get it—things don’t look great. Alphabet’s stock is down, and it’s battling regulators left and right. But here’s why this could be a golden opportunity for investors who have a little patience.

First off, let’s talk about Alphabet’s financials. As of September 2024, the stock is trading at a P/E ratio of 23.01, which, believe it or not, makes it relatively cheap compared to the rest of the tech sector​. Nvidia, for instance, is trading with a P/E ratio north of 100, and even Microsoft’s P/E ratio is higher than Alphabet's. Despite this, Alphabet’s fundamentals remain solid.

• Revenue is expected to reach $357.8 billion in 2024, a 16.4% jump from last year.

• EPS (Earnings Per Share) is projected to grow by a staggering 35.94% this year, jumping from $5.80 to $7.89​.

And here’s where it gets interesting: analysts predict Alphabet’s stock could hit $199.94 in the next 12 months, a potential 33% upside from today’s price​. That’s not a number you ignore, especially for a company of Alphabet’s size.

Yes, Alphabet is in the midst of a storm, but these numbers suggest a recovery is not only possible but probable. AI, Cloud, and Search will remain strong, and with the stock trading at a discount, long-term investors might be looking at a bargain.

Conclusion: Should You Buy Alphabet Now?

Look, Alphabet’s not perfect right now, and if you’re after a smooth ride, this isn’t the stock for you. But here’s what I see: Alphabet is still a tech behemoth with enormous cash flow, a growing AI business, and a robust cloud division. The stock’s current dip? It’s a reaction to uncertainty, not a reflection of Alphabet’s long-term value.

If you can stomach some volatility and trust in Alphabet’s AI-driven future, now could be a perfect time to buy. With a 33% upside on the horizon and strong financials to back it up, Alphabet could easily emerge stronger after the legal dust settles.

So, what’s the move? For me, it’s a cautious "buy." Regulatory challenges won’t disappear overnight, but Alphabet’s core businesses—especially AI—are here to stay.

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