Alphabet (GOOGL) vs. Microsoft (MSFT) – TradingView News

The technology sector is rapidly evolving to meet changing consumer needs. Companies are gradually integrating digital tools such as cloud computing, data analytics, artificial intelligence (AI) and the Internet of Things (IoT) to streamline operations and improve productivity.

According to Gartner’s latest forecast, global IT spending will reach $5.06 trillion in 2024, an increase of 8% compared to last year.

Moreover, generative artificial intelligence (genAI) has rapidly accelerated digital transformation in various industries, including healthcare, especially in areas such as disease diagnosis, drug discovery and tailored medical therapies. In addition, there is a noticeable trend of using artificial intelligence to improve customer service and support, an example of which is the implementation of chatbots and virtual assistants.

Given such good prospects, the artificial intelligence market is expected to grow at a CAGR of 28.5%, which will translate into a market size of USD 826.70 billion by 2030.

Against this background, let’s compare two technology companies: Alphabet Inc. GOOGLE and Microsoft Corporation MSFTto analyze May’s results.

Case for Alphabet Inc. Shares

With a market capitalization of $2.17 trillion, Alphabet Inc. GOOGLE offers various products and platforms in the United States, Europe, the Middle East, Africa, Asia-Pacific, Canada and Latin America. It operates through segments of Google services, Google Cloud and other establishments.

GOOGL shares are up 44.7% over the past year and 34.8% over the past nine months, closing the most recent trading session at $174.99.

On May 2, 2024, GOOGL and MongoDB, Inc. MDB announced that it is collaborating to optimize Gemini Code Assist to provide improved application development and modernization suggestions on MongoDB, the industry-leading developer data platform used by millions of developers and tens of thousands of customers every day for mission-critical applications.

Through this collaboration, Gemini Code Assist can help developers get answers and information about MongoDB code, documentation, and best practices so they can prototype new features faster and accelerate application development.

In terms of trailing 12-month EBITDA margin, GOOGL’s 34.49% is 84.4% higher than the industry average of 18.70%. Similarly, the 12-month capex/sales ratio of 11.94% is 215.3% higher than the industry average of 3.79%. Moreover, its trailing 12-month leveraged FCF margin of 17.31% is 114.5% higher than the industry average of 8.07%.

For the fiscal first quarter ended March 31, 2024, GOOGL revenues grew 15.4% year-over-year to $80.54 billion. The company’s operating income was $25.47 billion, an increase of 46.3% compared to the same quarter last year. The company’s net income increased 57.2% year over year to $23.66 billion. Additionally, EPS increased 61.5% from a year ago to $1.89.

Analysts expect GOOGL’s revenue for the second quarter (ended June 2024) to increase 12.6% year-over-year to $84 billion. Similarly, EPS for the same quarter is projected to increase 27.8% year-over-year to $1.84. Moreover, the company has exceeded consensus estimates for revenue and EPS in each of the four consecutive quarters, which is an outstanding result.

GOOGL’s POWR Ratings reflect its promising prospects. The stock has an overall rating of B, which translates to “buy” in our proprietary rating system. POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted optimally.

GOOGL’s solid fundamentals are reflected in POWR’s ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.

The stock is rated A for sentiment and B for quality. GOOGL is ranked 10th out of 52 internet stocks with a B rating.

In addition to the POWR Ratings I just highlighted, you can see the GOOGL Ratings for Growth, Momentum, Stability, and Value here.

Case for Shares of Microsoft Corporation

Microsoft Corporation valued at $3.20 trillion by market capitalization MSFT is a technology giant that develops and supports software, devices and solutions around the world. The company operates through Productivity and Business Processes; Intelligent Cloud; and more personal computer segments.

MSFT shares have gained 34.4% over the past nine months, closing at $430.16 in the most recent session. Over the past year, the company’s stock has increased by 37.1%.

On May 20, 2024, MSFT partnered with Coursera, Inc. COURSE, introducing four new entry-level professional certificates designed to prepare learners for careers that will grow exponentially in the coming decade. These certificate programs equip students with the skills necessary to launch a new career in just a few months, without the need for a college degree or prior work experience.

On May 8, 2024, MSFT announced a broad investment package to strengthen southeastern Wisconsin’s role as a center for AI-powered business, innovation and job creation.

These investments include $3.3 billion in cloud computing and artificial intelligence infrastructure, the creation of the nation’s first manufacturing-focused AI collaborative innovation lab, and an AI skills initiative aimed at equipping more than 100,000 state residents with the necessary artificial intelligence skills.

MSFT’s trailing-12-month gross profit margin of 69.89% is 40.8% higher than the industry average of 49.63%. Similarly, the trailing 12-month EBIT margin of 44.70% is 854.3% higher than the industry average of 4.68%. However, the trailing 12-month asset turnover ratio of 0.55x is 10.8% lower than the industry average of 0.61x.

For the third quarter ended March 31, 2024, MSFT’s total revenues increased 17% year-over-year to $61.86 billion. The company’s operating income was $27.60 billion, up 23% from the same quarter last year. Its net income rose 19.9% ​​from a year ago to $21.94 billion.

However, the company’s cash outflow from investing activities increased 228.2% from the prior-year period to $10.70 billion. As of March 31, 2024, MSFT’s cash and cash equivalents were $19.63 billion, compared to $34.70 billion as of June 30, 2023.

The Street expects MSFT’s fourth-quarter (ended June 2024) revenue to increase 14.6% year-over-year to $64.39 billion. The company’s EPS is estimated to grow 9% year-over-year to $2.93 in the same quarter. Moreover, the company has exceeded consensus estimates for revenue and EPS in each of the four consecutive quarters.

MSFT’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall rating of C, which translates to a Neutral rating in our proprietary rating system.

POWR MSFT Ratings reflect a mixed outlook. The stock has an overall rating of C, which translates to a Neutral rating in our proprietary rating system. POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted optimally.

MSFT has a C rating for growth and momentum. It ranks 21st among 44 companies in the Business Software industry.

AI Tech Stock Performance Analysis for May: Alphabet (GOOGL) vs. Microsoft (MSFT)

The global technology sector is thriving thanks to extensive automation, significant investment in digitalization projects, and the incorporation of advanced technologies such as generative artificial intelligence. The emergence of artificial intelligence has been a key point of innovation, changing the contours of industries around the world, thus fueling the growth of the technology industry.

Leading technology companies GOOGL and MSFT intend to capitalize on the industry’s optimistic outlook. However, GOOGL’s strong financial performance, higher profitability and promising near-term prospects make it a better choice for a technology stock.

Our research shows that your chances of success increase when you invest in stocks with an overall rating of Strong Buy or Buy. You can see all the top-rated Internet stocks here and Software – Business here.

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On Monday afternoon, MSFT stock was trading at $430.16 per share, up $3.16 (+0.74%). Year-to-date, MSFT has gained 14.81% compared to the benchmark S&P 500 Index’s gain of 11.73% over the same period.