Why Alphabet Stock Dips Are the Perfect Time to Invest

A few weeks ago, investors celebrated a concerted rally due to the US presidential election. But a few days later, markets cooled to show investors a potential rotation in themes, away from a potential resurgence of inflation and very quickly down into what could look like a recession. The camp is still divided between a recession and inflationary comeback.

Investors should deploy their capital wisely to navigate both scenarios, increasing their chances of a favorable outcome. While technology sectorwith its rally and historical volatility may seem appealing, one stock stands out today.

That stock is Alphabet Inc. (NASDAQ: GOOGL). Although some would call it expensive based on the valuation multiples at which it trades today, its fundamentals and business model promise a better future and stability regardless of which of the two scenarios (inflation or recession) plays out for the rest of the economy .

Reason #1: Why Google stock will outpace inflationary pressures

If the economy’s outcome is inflation, then businesses as a whole, especially medium-sized businesses, will see their margins shrink due to rising costs and think of ways to stage a recovery back to normal. To achieve this, a certain degree of outsourcing and automation must occur.

This is where Google stock comes into play. It offers business solutions at manageable costs, from advertising to storage and customer relations. Then there is the office and document management side, which directly competes with Microsoft Inc. (NASDAQ: MSFT) and its Office product line. However, Google does better with medium-sized companies than with large companies.

Knowing that the advantage of Google’s customer demographic is that it will act as a tailwind when and if inflation comes, as larger companies can easily diversify their costs through exposure to international markets and operations.

Reason #2: Google’s value proposition outshines competitors, even in a recession

What about a recession? Wouldn’t that be bad for everyone? Well, not for Google, especially when investors follow the same thesis and theme that helps the company through an inflationary theme. The reason is that as a recession hits and business activity declines, margins will be as crucial as ever for businesses to stay alive.

It also requires an affordable and efficient offering of Google services, where medium-sized businesses can call on Google to deliver stable margins and keep their businesses running accordingly during tough times.

While these two reasons are fundamentally valid, they are only part of the picture. Investors should check with Wall Street analysts and other market participants to determine whether these beliefs are widely accepted and adopted.

Wall Street’s Outlook on Google Shares: Analyst Sentiment and Market Perspectives

Price action is one of the most obvious indicators of whether the markets are bullish or bearish on a stock. The Google stock is now trading at 91% of its 52-week highwhich shows investors that momentum is present for the company, and for good reason.

So investors can check Wall Street ratings for more guidance, particularly from those at Pivotal Research, whose analysts recently reiterated their Buy ratings on Google stock, this time placing a Price target of $225 also on the name.

To prove those targets right, the stock would need to rise as much as 28.4% from where it’s trading today, not to mention a new high for the year. And if valuation multiples were all that mattered, then short sellers would want to raid this “expensive” name, but that’s not the case today.

Google’s short interest rates fell by 6.2% in the past month alone, signaling bearish capitulation in light of the upside inherent business model today. In the end, institutional investors were happy to pick up where these running bears left off.

Those at Geode Capital Management decided to increase their Google stock holding by 2% from November 2024, bringing their net position to a high 22.1 billion dollars today, giving investors another sign that additional momentum is coming soon for Google, regardless of which of the two economic scenarios ends up playing out.

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