Alphabet’s Google stock (NASDAQ: GOOG) hit an all-time high of $408 in mid-May and has only been moving backward since then. The search giant has experienced a series of profit bookings and sell-offs, dragging its price down. GOOG had fallen to the $350 level, but opened Friday’s trading session at $356. Will the leading tech titan dip further, or is this the best buying opportunity at the $350+ level? In this article, we will weigh the risks and pros of investing in GOOG at this price range.
Also Read: Why $455 Google Stock Target From New Street Can Be Taken Seriously
Google Stock: The Pros of Investing in GOOG Now
Alphabet has successfully raised $80 billion in equity capital, and the largest investment came from Warren Buffett’s Berkshire Hathaway. The investment arm also purchased Google stock in the deal at the $351.81 (Class A GOOGL) shares. If smart money is taking its entry position at $350, there definitely has to be some weight on the decision.
In addition, Alphabet’s Cloud enterprise is growing at an explosive rate of 63% year-over-year. The backlog already sits at $462 billion, which makes Google stock a safe contender for the next five years minimum. The broader consensus on Wall Street is also a ‘buy’ with price targets going above the $400 level. Therefore, an entry position at the $350 level could be a good entry point.
The Risks To Consider Before Investing
Alphabet is facing regular scrutiny from regulators, not just from the US, but in Europe and the rest of the world. Government watchdogs, who previously imposed just fines, are going a step further in taking on the company. They include dismantling exclusive contracts, cancelling funding from business, among others. Fines are becoming a thing of the past, and are now taking measures that can affect their business. Google stock can be caught off guard in the crosshairs of government lawsuits and compliance.
In addition, the capex on AI is also worrisome, with $185 billion on the line. Not just Alphabet, several tech giants are spending billions to build their AI projects and outperform their peers. The competition is intense, and no single entity can remain at the top forever without innovation. Alphabet is at risk of being outpaced by another tech firm that can cause Google stock to remain on a sticky wicket.
The Final Verdict
The pros mostly outweigh the risks here, as Alphabet will now be more alert in its business methods, so as not to lose out on contracts. They will remain attentive to avoid including market malpractice to safeguard their business. The AI capex is also an investment that has the ability to pay off in the long term. In conclusion, buying Google stock at the $350 level outweighs the risks, and the multinational corporation can deliver the gains.