Technical Overextension and AI Risk in Google

about 1 month ago

Lance Roberts

"Google is trading at a forward PE of 23 and a peg of 1.82, which suggests it is fairly valued on an earnings growth basis. However, technical analysis shows the stock is pushing three to four standard deviations above its long-term moving averages, highlighting an almost 99% probability it will correct."

Google is seen as fundamentally strong with solid earnings growth and share buybacks, yet its price action has become extremely overbought on technical measures. There are concerns that the ongoing AI developments might disrupt its traditional ad revenue model, despite its current valuation. Investors are advised to monitor for a technical correction which seems statistically likely, even if the fundamental story remains positive.

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