Here, we focus on identifying stocks that have experienced (and perhaps will soon) a 10% price pullback from recent highs, presenting potential buying opportunities. This 10% pullback strategy is based purely on technical analysis, especially price action, without delving into the underlying fundamentals of the companies. We aim to uncover stocks that are showing signs of recovery or consolidation, offering traders a chance to enter at a potentially discounted price. Please refer How to Choose Stocks for the 10% Pullback Strategy to choose stocks that are safer for using the 10% pullback strategy, ensuring that you’re buying into companies with solid fundamentals and long-term growth prospects.
Weekly Analysis
*Updated: 15 Mar, 2025
Buy Stock During Market Correction
| GOOG | Stock Price | Remarks |
|---|---|---|
| Recent High | 208.70 | 4 Feb, 2025 |
| 10% | 187.83 | 1/3 of capital, set TP: 204.26 |
| 20% | 166.96 | 1/3 of capital, set TP: 187.83 |
| 30% | 146.09 | 1/3 of capital, set TP: 166.96 |
| Target Price | 204.26 | sell remaining stocks |
| Support 1 | 143.94 | |
| Support 2 | 105.10 | strong |
Why Buy Alphabet Inc (Google) Stock
For long-term holding, investing in Alphabet (Google) can be seen as a compelling choice because of its strong fundamentals, consistent growth, and ability to adapt to new markets. Let’s break down why Alphabet is such a solid candidate for long-term investors:
1. Sustained Market Leadership
- Search Engine Dominance: Google’s search engine is the undisputed leader in its category. While new search engines and competitors pop up now and then, Google consistently holds over 90% of the global market share. This dominance ensures that Google will continue to rake in ad revenue for the foreseeable future. As the internet’s default search engine, it has established a moat that’s hard to breach.
- YouTube as a Revenue Engine: YouTube is another massive growth driver. It dominates the video-sharing space and has been expanding rapidly in areas like YouTube Ads, YouTube TV, and YouTube Premium. Given the shift toward video content, YouTube is a key player in Alphabet’s long-term revenue growth.
2. Monetization Power Through Ads
- Google Ads & YouTube Ads: The ad business is the backbone of Alphabet’s revenue stream, generating over 80% of its total revenue. Google’s targeting capabilities are unmatched because of its vast data ecosystem—search history, location data, Gmail, YouTube interactions, and more. This enables Google to offer advertisers highly precise targeting that maximizes their return on investment.
- Expanding Ad Network: Google has diversified its ad portfolio with Google Display Network, Google Shopping, and even in-app advertising, ensuring that the company continues to grow its ad revenues from all directions. The company’s ad business is extremely scalable, especially as more and more businesses move to digital.
3. Innovative Technologies Driving Future Growth
- Artificial Intelligence (AI) & Machine Learning: Alphabet has become one of the leaders in AI. It’s applying machine learning across its products—from search rankings to ad targeting, to Google Assistant, to self-driving cars through its subsidiary Waymo. Alphabet has also made heavy investments in AI research, notably through DeepMind, which is at the cutting edge of AI advancements (including breakthroughs in protein folding). AI is expected to play a massive role in every industry over the next decade, and Alphabet is well-positioned to capitalize on this.
- Cloud Computing: Google Cloud is the third-largest cloud provider after AWS and Microsoft Azure. The cloud market is growing rapidly, and Alphabet has made significant inroads with large enterprises and small businesses alike. Google’s cloud services are expected to be a major growth driver, and it is likely to continue capturing more of the market share as businesses shift more of their operations to the cloud.
- Autonomous Vehicles (Waymo): Waymo is another exciting area. While self-driving technology is still in its early stages, Alphabet has already made significant investments in autonomous vehicles. With the potential to disrupt industries like transportation, logistics, and mobility services, Waymo could become a major contributor to Alphabet’s revenue down the line.
4. Diversified Portfolio of Businesses
- Alphabet is more than just Google; it’s a sprawling tech conglomerate with stakes in various cutting-edge industries. Some of these include:
- Verily: Focuses on health technology and life sciences, exploring things like disease prevention and medical devices.
- Calico: Dedicated to aging research, with the ambitious goal of extending human life expectancy.
- Waymo: As mentioned, it’s Alphabet’s autonomous vehicle project.
- Nest: Smart home products, contributing to the growing Internet of Things (IoT) market.
- Other Bets: Alphabet continues to invest in various other sectors (e.g., drone delivery, fiber internet) that could generate significant revenue in the future.
5. Financial Strength & Cash Reserves
- Alphabet has an enormous balance sheet, with billions in cash reserves. This provides the company with financial flexibility to reinvest in its businesses, acquire startups, or weather economic downturns. Alphabet doesn’t need to rely heavily on external debt, and it has a history of buying back shares to boost shareholder value.
- The company consistently generates free cash flow, meaning it can invest in growth opportunities, pay dividends (if they choose to), and maintain a high degree of financial stability.
6. Strong Ecosystem & Brand Loyalty
- Google’s services, from Gmail and Google Docs to Google Photos and Google Maps, are deeply ingrained in the daily lives of millions of people. Alphabet also dominates mobile with Android, which powers the vast majority of smartphones globally.
- Brand loyalty is a key component of Alphabet’s strategy. Consumers trust Google’s services, and this loyalty helps ensure continued usage and engagement, which in turn leads to more revenue through its advertising and subscription-based services (YouTube Premium, Google One, etc.).
7. Long-Term Vision and Leadership
- Leadership Team: Alphabet’s leadership, including founders Larry Page and Sergey Brin (though they have stepped down from day-to-day operations), has a long-term vision for the company. Sundar Pichai, the current CEO, is focused on maintaining Alphabet’s leadership in AI, cloud, and hardware while also managing a sprawling, diversified company.
- Alphabet’s culture of innovation, which dates back to its early days, continues to drive its long-term growth. The company has a history of thinking decades ahead, and its focus on R&D positions it well for the future.
8. Sustainability and ESG Initiatives
- Environmental Commitment: Alphabet has made significant strides in becoming more environmentally sustainable. The company was one of the first major corporations to achieve carbon neutrality in 2007, and it continues to focus on renewable energy and sustainable operations.
- Social Responsibility: Alphabet also focuses on social issues, from improving digital literacy to supporting diversity and inclusion initiatives. This commitment to ESG (environmental, social, and governance) factors is important as investors increasingly look for companies that are socially responsible and forward-thinking.
9. Stock Buybacks & Return to Shareholders
- Alphabet has been actively repurchasing its own stock. This reduces the number of shares outstanding, thereby increasing the value of remaining shares. The company’s cash flow generation makes it a strong candidate for buybacks, which can provide long-term shareholders with attractive returns, especially if the stock price rises over time.
Conclusion
In the long term, Alphabet’s combination of market leadership, consistent revenue generation, innovation, and financial strength makes it an appealing choice for investors. The company is not just dependent on one area of business (like search); it has a diversified portfolio across various growth sectors, from AI to cloud computing to self-driving cars. As the tech landscape continues to evolve, Alphabet is positioned to maintain its dominance and grow its business, making it a solid pick for investors who want a mix of stability and future growth potential.
Alphabet’s adaptability to changing markets, combined with its expansive reach, makes it an excellent candidate for long-term holding in a portfolio. Does that make sense to you? Any particular part of Alphabet’s business you find most interesting for the long haul?