Enjoying this bite?
Sign in (free) to track this channel, unlock new bites the moment they drop, and search every summary we've ever made.
Source: YouTube. Summary is AI-generated from the video's captions and may contain errors. It does not represent the views of TubeBite, the creator, or YouTube. Watch the original before relying on anything important.
SUMMARY
Parkev Tatevosian, CFA, provides a detailed projection for Alphabet's stock price by the end of 2027, analyzing earnings estimates, valuation multiples, and potential industry catalysts. The discussion covers both upside opportunities, such as advancements in driverless car technology, and downside risks related to Alphabet's AI competitiveness.
MAIN POINTS
- Alphabet's projected 2028 earnings per share and current forward price-to-earnings ratio are used to model potential stock prices for 2027.
- Scenario analysis suggests Alphabet's share price could range from $346 to $467 depending on changes in valuation multiples.
- A major upside catalyst could be rapid adoption of driverless cars, where Alphabet's Waymo holds a leadership position.
- Market perceptions currently favor Tesla over Alphabet in autonomous vehicles, despite Alphabet's operational lead.
- A significant risk is a decline in the performance of Alphabet's Gemini large language model compared to competitors.
- Access to detailed stock prediction spreadsheets is available to channel members at the investor tier or above.
DETAILED ANALYSIS
Alphabet's stock has experienced notable volatility in 2024, with prices fluctuating between $275 and over $400 per share before settling at $344. To estimate where the stock might be by December 31, 2027, analyst projections for earnings per share (EPS) are considered, with Wall Street expecting $17.29 EPS for fiscal year 2028. The current forward price-to-earnings (PE) ratio is around 23, which is at the higher end of recent historical levels.
Scenario analysis based on these figures yields a range of possible outcomes: if the PE ratio remains at 23, the stock could reach $402; if it rises to 25 or 27, the price could climb to $432 or $467, respectively. Conversely, if the PE ratio declines, the price might remain flat at $346. The most probable outcome is estimated to be a share price between $410 and $450, representing approximately 25% upside from current levels over the next 15 months.
A key potential upside not currently priced in by the market is the rapid proliferation of driverless car technology, where Alphabet's Waymo division is a clear leader in the United States. If Waymo expands significantly, capturing a substantial share of what could become a trillion-dollar industry by 2030, Alphabet's revenues could increase dramatically, potentially doubling current totals. However, market sentiment presently favors Tesla as the likely dominant player due to its lower-cost, camera-only approach, despite Alphabet's operational advantages.
On the downside, a significant risk is a deterioration in the performance of Alphabet's Gemini large language model. Currently ranked third behind Anthropic and OpenAI's ChatGPT, a further decline could negatively impact Alphabet's valuation, possibly pushing the stock below $300. The company's heavy investments in AI, data centers, and proprietary chips underscore the importance of maintaining competitiveness in this area.
Overall, while the base case suggests moderate upside, both significant opportunities and risks could shift Alphabet's trajectory over the coming years.
LINKS
- YouTube channel membership page for exclusive perks and spreadsheet access.
- Special offer for The Motley Fool Stock Advisor.
- Purchase Parkev Tatevosian's book on stock evaluation.
- Discounted access to Fiscal.ai, a primary data source for investment research.
- Sign up for Webull and receive bonus shares.
- Subscribe to Parkev Tatevosian's monthly Substack newsletter.