Google Stock Price Up 44% This Year – Time to Buy Google Stock?

Google-parent Alphabet (GOOG) has been the best performing FAANG (Facebook, Amazon, Apple, Netflix, Google) stock so far in 2021. With a year-to-date gain of 44%, it is outperforming the FAANG peers and is among the top 30 gainers in the S&P 500. Is GOOG still a good buy?

The tables have turned for FAANG stocks in 2021. Apple and Amazon, which were the top two FAANG stocks in 2020 are underperforming this year. Apple is the second-worst performing FAANG stock in 2021 and is marginally in the red this year.

FAANG stocks

Apple, which is the largest holding of Berkshire Hathaway, was the best performing FAANG stock in 2020 with gains of 81%. Amazon was the second-best FAANG stock in 2020 with gains of 77%. Streaming giant Netflix gained 62%. However, Facebook and Alphabet were laggards and gained 32% and 30% respectively. Both FB and GOOG underperformed the Nasdaq as well which gained over 45% last year.

Incidentally, Loup Ventures co-founder Gene Munster had predicted that Apple (AAPL) will be the best-performing FAANG stock in 2021 for the third time in a row. He had correctly predicted Apple’s market capitalization rising to $2 trillion previously, and said that the iPhone maker will go on to hit a market cap of $3 trillion. So far, Munster’s prediction hasn’t come true, and it is GOOG and not AAPL which is the best performing FAANG in the first half of 2021.

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Google stock recent developments

US tech giants including GOOG are facing anti-trust issues not only in the domestic market but also globally. Several governments have either imposed a digital tax or were contemplating imposing one on tech giants. Next week, US lawmakers will vote on five anti-trust bills. This could lead to volatility in tech giants like GOOG.

Furthermore, the global minimum tax proposed by the G7 could mean that companies like Alphabet end up paying more tax. The monopoly enjoyed by companies like GOOG and AAPL in their app stores is another concern and last year Epic Games had sued both these companies after its Fortnite was removed from app stores over alleged policy violations.

Google stock price is outperforming

Meanwhile, even as some of the high-growth tech names have looked weak in 2021, Alphabet stock is outperforming. This year, investors have rotated out of high-growth tech names to established companies and GOOG seems to have benefited from the trend. It has an NTM (next-12 months) PE multiple of 28.3x which looks reasonable as compared to other tech names.

Also, in 2020 FB and GOOG stocks were weak as ad rates had plummeted amid the COVID-19 pandemic. Now, with ad rates looking up, analysts expect better days for GOOG and are forecasting its revenues to increase 29% in 2021. The revenues had risen around 13% last year which was lower than what it had posted in the previous few years.

Overall, from a fundamental perspective, GOOG stock looks well placed to capitalize in the economic recovery as well as the increased pace of digitization.

Google shares technical analysis

GOOG stock has found a strong support near its 50-day SMA (simple moving average). It is also trading above its 100-day and 200-day SMA. Overall, the stock is looking bullish on the charts looking at the moving averages. Its 14-day RSI (relative strength index) is currently at 55.5 which is a neutral indicator and does not suggests either overbought or oversold positions.

Where do analysts see Google Shares heading?

Wall Street analysts see more upside for GOOG stock and its median target price of $2,800 implies an upside of 16.6% over the next 12 months. Of the 45 analysts covering the stock, 44 rates them as a buy or some equivalent while the remaining one analyst rates them as a hold.

While GOOG stock looks like a buy on both technicals and fundamentals, rising global scrutiny of US tech giants could be a concern. The stock could be volatile next week as US lawmakers take up the antitrust bills.

Also, Reuters reported that by the end of this year, the European Union will launch a probe into Google’s digital advertising business. The company earned $147 billion through online ads in 2020.

A long term bet

That said, GOOG stock looks like a good long-term bet despite the noise over regulatory scrutiny. The company is also investing in autonomous driving with its subsidiary Waymo. This week, Waymo secured funding of $2.5 billion. The self-driving industry has a positive outlook. Tesla’s CEO Elon Musk had previously said that most of the company’s valuation comes from its software part of the business which predominantly is about Autopilot, its self-driving software. Over the long term, Waymo could be a key value driver for GOOG investors as the world transitions to smart and connected vehicles.

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