Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) announced a stock buyback plan for its Class A and Class C shares that could total up to $70 billion. Markedly, this is the second year in a row that the tech giant has carried out such a massive repurchase program.
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Alphabet approved a separate $70 billion buyback in April 2022 and another $50 billion in 2021. For the latest authorized program, the company said that share prices, market conditions, business conditions, and the volume of the company’s shares will all play a part in the repurchase decision.
It is worth highlighting that the company has sufficient cash flow to fund the buybacks. Alphabet’s five-year free cash flow compound annual growth rate of 21.4% depicts an impressive picture.
In addition to the buyback, Alphabet’s Q1 earnings report contains other noteworthy items. Google’s ad sales decreased for the second time in a row, but they still exceeded analysts’ expectations, which were for $53.7 billion.
Moreover, the company’s Cloud unit swung to profit for the first time with a 25% jump in revenues. Alphabet CEO Sundar Pichai said, “We are pleased with our business performance in the first quarter, with Search performing well and momentum in Cloud.”
Is GOOGL Stock a Buy or a Sell?
Following the Q1 earnings release, Goldman Sachs analyst Eric Sheridan reiterated a Buy rating on GOOGL stock and raised his price target to $132 from $128. The analyst believes Alphabet has the potential to benefit from the rising demand for several computing platforms.
Sheridan also forecasts that the company’s performance in 2024 and beyond will be driven by strong digital advertising, improvements in its Cloud segment, and consistent shareholder returns.
As per TipRanks, analysts are optimistic about the stock and have a Strong Buy consensus rating, which is based on 29 unanimous Buys. Alphabet’s average price forecast of $127.11 implies 22.4% upside potential. The stock has gained 16.5% so far in 2023.
