Alphabet (GOOGL) Stock May Go Down after Microsoft’s 10% Decline in Search Revenue

UTC by Steve Muchoki · 3 min read
Alphabet (GOOGL) Stock May Go Down after Microsoft’s 10% Decline in Search Revenue
Photo: Depositphotos

Microsoft and Alphabet search revenue have been noted to have a direct correlation. GOOGL stock price may go down in the nearest future,

Alphabet Inc (NASDAQ: GOOGL) stock may face a possible decline in the next few days with major fundamentals acting against it. With the company expected to report its quarterly earnings on Thursday, analysts predict a possible decline in search revenue after Microsoft Corporation (NASDAQ: MSFT) reported a 10% drop in these figures.

Notably, Microsoft and Alphabet search revenue have been noted to have a direct correlation, which is the basis for the decline call on the latter’s stocks.

GOOGL Stock

During Wednesday’s premarket trading session, GOOGL stock was trading around $1,593.20 having dropped approximately 0.36%. Despite the possible decline in GOOGL stock price in the next few days, MarketWatch analytics indicates that 44 Wall Street experts have on average given Alphabet stock a Buy rating.

This perhaps might have been inspired by the overall positive performance during the pandemic and also the demand for its services in the coming quarters.

According to metrics provided by MarketWatch, Alphabet stocks have added approximately 26%, 19%, 6.3% and 9% in the last one year, year to date, three months, and one month respectively. In addition, the company had a market capitalization of around $1.08 trillion with 300.47 million outstanding shares.

Being a technology company that offers much-needed services with such a high valuation, its shareholders have an assurance of future returns.nAs a result, long term holders of alphabet stocks might rejuvenate the bulls to rise to a new all-time high.

If the report on Thursday beats Wall Street’s expectations, Alphabet stocks could breakout and rally above its record levels. However, if tomorrow’s earnings report comes out below the expectations, a possible drop to the next support level could occur. Whereby on this scenario would see Alphabet stocks trading around $1500.

Relation between Alphabet Stock and Search Revenues of Microsoft

Alphabet is the parent company to Google Inc. Although Microsoft has been in existence for a longer period, its search engine Bing is not widely used and Google. Graphical interpretations have revealed that their search revenues are directly related, hence giving analysts a way of predicting either after one of them reports earnings earlier than the other.

To put the theory into a clear perspective, during the previous quarter, Microsoft’s search advertising revenue, excluding traffic acquisition costs, decreased 18% as customers spent less on ads. This preceded Alphabet’s report that indicated a decline of about 10% from the year-ago quarter.

Additionally, during the first quarter that ended in March, Microsoft search revenue excluding traffic acquisition cost increased by 1%. Notably, in the same quarter Alphabet search revenue increased by 9%.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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