Buy the Pullback in Alphabet Stock After Q4 Earnings?

Core Viewpoint - The selloff in Alphabet (GOOGL) stock may be an overreaction despite the company exceeding Q4 expectations, as concerns about increased spending and slower cloud growth arise [1] Group 1: Q4 Results - Alphabet's Q4 sales after traffic acquisition costs (TAC) reached $81.62 billion, a 12% increase year-over-year, surpassing Zacks estimates of $81.37 billion [2] - Google Cloud revenue grew by 30% to $11.95 billion compared to $9.19 billion a year ago, but fell short of estimates by 1.51% [2] - Q4 net income was $26.5 billion or $2.15 per share, exceeding expectations of $2.12 and marking a 31% increase from the previous year's EPS of $1.64 [3] Group 2: Full Year Results - For fiscal 2024, Alphabet's total sales increased by 14% to $350 billion from $307.39 billion in 2023 [4] - Annual earnings rose by 38% to $8.04 per share from $5.80 in 2023 [4] Group 3: Capital Expenditures and Guidance - Alphabet anticipates a nearly 43% increase in capital expenditures for FY25, projecting $75 billion compared to $52.5 billion last year [5][8] - The rise in CapEx is aimed at expanding AI efforts, particularly in technical infrastructure [8] Group 4: Financial Position and Valuation - Alphabet maintains a strong balance sheet with $95 billion in cash and total assets of $450.25 billion, significantly exceeding total liabilities of $125.17 billion [9] - The company has the lowest P/E valuation among the Magnificent 7 tech stocks at 23.1X forward earnings, compared to Meta Platforms at 27.1X and cloud competitors Amazon and Microsoft at 38.7X and 31.6X respectively [10] Group 5: Market Sentiment - There are mixed opinions on Alphabet's ability to sustain its growth trajectory, with GOOGL shares up 30% over the past year [12]