Alphabet stock is back above $100! Should I buy?

It was just a month ago when Microsoft announced plans to crush Google by integrating ChatGPT into its search engine, Bing. This causes Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) fell to $89. But with the stock now back above $100, should I increase my position?

Bard hiccupped

The drop in Alphabet’s stock in February was also due to Google when it introduced its own AI language model, Bard. The chatbot answered a question wrongly leading to a massive sell-off as investors feared the company was losing the AI ​​battle.

However, the Bard has returned. Google has launched an experimental version, and it is available to those who have registered on the waiting list. I have been lucky to gain access to it – and I would even go as far as to say that it trumps ChatGPT in certain areas due to the ability to access real-time data.

To complement this, Google is rolling out AI capabilities for the Workspace app. Some users can now integrate AI into their emails, documents, spreadsheets, and presentations. So, it’s no surprise to see Alphabet shares rally on the back of this update.

Cruel management

Alphabet’s gains were not without pain, however. AI-related queries and functions are more expensive to run because of the computing power required. Therefore, the management has been looking for ways to reduce the increase in costs, mainly due to the decrease in revenue and income.

CFO Ruth Porat has spoken of the Board’s intention to improve the bottom line through staff layoffs. The conglomerate plans to cut 12,000 jobs, and the positive impact on earnings should be seen in the company’s Q3 numbers.

Alphabet is a confidence buy for me

This leads to the reason why I still buy Alphabet shares, something I felt back when the shares dropped in February. I feel that in addition to being a blue-chip conglomerate, there are many ways to grow. These include YouTube, Google Cloud, DeepMind, Waymo, and AI capabilities.

What’s more, the group collectively has one of the best balance sheets on Wall Street. With a debt-to-equity ratio of 5% and a mountain of cash, Alphabet has more than enough cash to fund its growth efforts while returning a satisfying amount to shareholders through share buybacks.

And while Bing has become more popular recently, Google remains the world’s most popular search engine to this day. This is partly due to dealing with Apple being the default search engine on all iOS devices, as well as Android being the most widely used mobile operating system.

For these reasons, some brokers such as Stifel, BNP Paribas, and JMP have all upgraded or stated ‘buy’ ratings on the stock in the past week. It’s not hard to see why, as the stock’s multiple has been around for years and below the industry average.

Thus, with an average price target of $132, buying shares today can provide a potential profit of 26%. So, despite Alphabet’s recent rally, I still see the current share price as a rare opportunity to capitalize on its huge potential. Therefore, I will look to increase it to the largest position.