Google posted its worst performance in almost three years last month as the price of Google stock (NASDAQ: GOOGL) dropped roughly 16% in February.
As of late, tech giants have experienced significant pullbacks even after posting earnings beats. On February 4, the purveyor of the world’s most popular search engine held its Q4 and FY 2024 earnings call. Despite a modest earnings per share (EPS) beat, overall revenues came in below consensus estimates.
More importantly, Google Cloud revenue also failed to meet expectations. In addition, the company announced capital expenditures (CapEx) to the tune of $75 billion for 2025, significantly above estimates, which were pegged at approximately $59 billion.
Picks for you
At press time, a single GOOGL share could be had for as little as $171.81, having marked a 9.24% decline since the start of the year.
While this might seem like an inauspicious showing in the year’s first quarter, there’s a case to be made for buying the dip.
Let’s take a closer look at several key factors, as well as Wall Street’s reaction to the latest developments.
Is Google stock the best magnificent 7 play in terms of value?
In the aftermath of the earnings call, numerous Wall Street firms revised their outlook on Google stock. Most of these revisions entailed lowered price targets. However, it’s quite telling that a majority of analysts have kept ‘Buy’ or ‘Overweight’ ratings.
Morgan Stanley and JPMorgan analysts reiterated positive coverage with 12-month price forecasts of $210 and $220. If met, those price targets would correspond to a 22.22% and 28.04% surge, respectively.
Bank of America researcher Justin Post offered an even more bullish perspective, having increased his price target on Google stock from $210 to $225. Post highlighted healthy search engine traffic and revenue growth in a note to investors, stating that rising competition from artificial intelligence (AI) platforms has not materially affected these metrics.
At present, GOOGL is trading at a trailing price to earnings (PE) of just 21.17 — and a forward PE of 19. This makes it the most affordable stock in the magnificent 7, and by quite a wide margin. For reference, at the time of writing, the next best forward PE belongs to Meta, at 26.41.
While high capital expenditures remain a worry, that worry is by no means relegated to Google alone. Investors seeking to capture growth from the tech sector should consider going long on GOOGL shares. Even after factoring in recent price target cuts, analysts still forecast the Magnificent 7 stock with the most attractive valuation to outperform the S&P 500 throughout 2025.
Featured image via Shutterstock
