Google Stock Undervalued as Revenue Growth Soars
Alphabet's stock has dropped to $356 after its Q2 earnings report, but analysts believe it's undervalued. The company reported a 24% revenue growth and an 82% Cloud expansion, making its forward P/E of 17 cheaper than the average S&P 500 stock.
The $514 billion Cloud backlog is expected to convert to revenue in 24 months, with nearly 90% of Fortune 100 companies using Gemini Enterprise. Google's CFO warned of 'modest margin pressure' in Q3 due to third-party capacity and increased capex, which turned free cash flow negative.
Despite the concerns, analysts predict a consensus price target of $427, implying roughly 19.9% upside from its current price. The stock has already gained 86.11% over the past year, with Cloud growth compressing the multiple.