Alphabet's Stock Soared in 2024: A Deep Dive
In 2024, shares of Google parent company Alphabet saw a remarkable surge of 35.5%, as reported by S&P Global Market Intelligence. Entering the year with doubts about its competitive edge in the AI race and facing antitrust scrutiny, Alphabet defied expectations, delivering impressive technological and financial achievements.
Despite skepticism and intensified competition, Alphabet not only weathered the storm but also thrived, demonstrating its resilience. One critical moment came in February, when Alphabet's image generator, Imagen 2, drew criticism for generating German uniform-wearing people of color in Nazi soldier portrayals, powered by their Gemini large language model (LLM). However, the company responded by improving the technology with Imagen 3, which garnered positive reviews by year's end and solidified Alphabet's position as a leading AI player.
Beyond Imagen 3, Alphabet demonstrated significant gains in other AI ventures. December marked the arrival of Gemini 2.0, an upgraded family of LLMs, which were well-received by technologists. In the same month, Alphabet also unveiled a quantum computing chip, Willow, which managed to complete a calculation in just five minutes that conventional technology had struggled with for the entirety of the universe's existence.
Meanwhile, Alphabet's self-driving car unit, Waymo, made significant strides. After years of being labeled as an expensive experiment, Waymo delivered over 4 million rides in 2024, more than doubling its previous achievement of 1 million rides. Waymo expanded its services in San Francisco and Los Angeles and announced plans to launch in Austin, Atlanta, and Miami in the following years.
The tech giant's strong financial performance further boosted its share price. Despite AI posing a perceived threat to its search franchise, Google Search grew at a solid 13.4% through the first nine months of 2024. Meanwhile, Google Cloud showed significant growth of 30.9%, outperforming larger competitors. Operating margins for the Overall company expanded from 27.4% to 32.1% during the same period.
Alphabet entered the year with a lower multiple than the "Magnificent Seven" stocks, making its stellar financial results even more noteworthy. Despite ongoing antitrust pressures, such as a federal judge ruling Alphabet held an illegal monopoly in the search market, the company's impressively innovative solutions and financial performance continued to attract investors.
Analysts remain optimistic about Alphabet's future, with an average one-year price target of $215.95, indicating an 11.4% increase. The company's robust financial performance and strategic partnerships, such as the collaboration with Synaptics, have further bolstered investor confidence.
Though antitrust challenges remain, Alphabet's impressive ability to navigate these hurdles while continuing to innovate in AI has been a significant factor in its share price surge. Furthermore, the company's homegrown Trillium TPUs, its vast user base, and a supportive regulatory environment have helped Alphabet maintain its competitive edge in the rapidly evolving AI landscape.
Alphabet's impressive financial performance, including the growth of Google Cloud by 30.9%, attracted numerous investors, leading to increased interest in investing in the company. Recognizing the potential in Alphabet's innovative solutions and resilience, many individuals started allocating more money towards finance in the company's stocks.
