Roaring to new 52-week highs, Alphabet’s GOOGLÂ stock has made headlines this week following the announcement of its new state-of-the-art quantum computing chip.
Known as Willow, the chip is geared to crack a key challenge in quantum error correction pursued in the computing field for almost 30 years. Furthermore, Willow is light years ahead regarding performance across several metrics and standard benchmark computation.
Â
Alphabet’s stock has edged toward $200 a share in a move that largely mirrors its Magnificent 7 big tech peer Amazon AMZN. Notably, Amazon shares have soared past $200 after announcing an updated version of its super AI chip Rainer last week which has delivered a supercomputer with a foundational AI model.
Similarly, Willow has lit a spark in Alphabet’s stock which had recently broke above its 50-day and 200-day Simple Moving Averages (SMAs) that were in the $160 a share range. Setting up a bullish pattern of its own, Alphabet’s stock has soared +16% in December and is sitting on +40% gains for the year. Year to date, this has trailed Amazon’s +50% but has impressively topped the broader indexes.
Image Source: Zacks Investment Research
Â
Designed to significantly reduce errors when it scales up, Alphabet stated Willow performed a computation in under five minutes that would take a supercomputer 10 septillion years to complete. This breakthrough is seen as a step towards commercially relevant quantum computers that can revolutionize fields like medicine, energy, and AI capabilities. Â
Â
With Alphabet sparking the interest of technical traders what may appeal to investors is that GOOGL trades at 23X forward earnings. Offering a slight discount to the benchmark S&P 500, GOOGL has the cheapest P/E valuation of its Mag 7 peers as the next closest is Meta Platforms META at 27.3X with Amazon at 43.3X.
Image Source: Zacks Investment Research
Like most of its Mag 7 peers, Alphabet is expecting double-digit top and bottom-line growth in the coming years with Willow being a potential catalyst for its expansion and market dominance. However, after such an extensive rally, Alphabet’s stock currently lands a Zacks Rank #3 (Hold).
That said, a buy rating and higher highs could be on the way thanks to a trend of positive earnings estimate revisions (EPS) for fiscal 2024 and FY25.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report