Going Into Earnings, Is Alphabet Stock A Buy, Sell, Or Fairly Valued?

Alphabet (GOOGL) is set to release its third-quarter earnings report on Oct. 24. Morningstar’s take on what to look for in Alphabet’s earnings is that its stock is undervalued compared with its long-term fair value estimate of $161.00 per share. Advertising revenue is expected to remain over 70% of Alphabet’s total revenue, driven by continuing growth in overall digital ad spending. YouTube is expected to contribute about 13-14% of Google’s advertising revenue in 2023 and 2024. Alphabet is also expected to gain traction in the cloud market, with 23% annual revenue growth through 2027. We assign Alphabet a wide moat, thanks to durable competitive advantages derived from its intangible assets, as well as its network effect.