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Zacks Investment Ideas feature highlights: Alphabet, and Apple

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For Immediate Release

Chicago, IL – May 13, 2022 – Today, Zacks Investment Ideas feature highlights Alphabet (GOOGL - Free Report) , and Apple (AAPL - Free Report) .

Alphabet Wagers Big Bet on Wearable Accessories

Whether the market is climbing or declining, you can bet on one thing – companies are constantly innovating and developing new products to drive future growth. It's no surprise, but it's a vital aspect of a business that allows it to stay competitive and retain investor interest.

Although the tech-rout of 2022 has significantly worn investors down, there are still positive aspects of these companies to look forward to that can help shares find new life. Yesterday, we had big player Alphabet host its annual conference for developers; the event is called Google I/O.

The event is hosted annually, and it gives consumers and investors a sneak peek behind the curtains as to what cutting-edge pieces of technology Google has been working on. It's an exciting event for investors who want to remain informed and ensure that the company has been busy pushing boundaries behind the scenes.

Two of the major products that the company unveiled were Pixel Buds Pro and a brand-new Pixel Watch. These two developments give off similar strategies and products that we've seen with Apple in its AirPods and the Apple Watch.

Pixel Watch & Pixel Buds Pro

Before pulling the curtain back on the Pixel Watch, there had been many rumors floating around that this would be the event that Google would finally showcase the product – and it turned out to be true. It feels like a direct comparison and attempt to remain competitive in the smartwatch arena that Apple has recently taken by storm.

The watch looks very sleek with its curved glass nature. Releasing in the fall, the smartwatch will come with integration with Fitbit and will also have the ability to utilize Google Wallet. Additionally, the watch will run on GOOGL's Wear OS smartwatch feature. Unfortunately, a price tag was not revealed, though the company said that it sees it as a premium product.

The watch displays the company's first dive into the smartwatch arena. Apple has dominated this space with its smartwatch, and the company undoubtedly saw the major success that AAPL has had.

In AAPL's latest quarterly release, the company reported that quarterly revenue from its wearables business segment had raked in $8.8 billion, a beautiful 12% increase from the year-ago quarter. Additionally, Apple Watch revenue has surged 70% from $29.8 billion in 2019 to $40.8 billion in 2021. Clearly, the smartwatch arena is a lucrative arena that GOOGL is trying to tap into.

Alphabet already has its Pixel Buds on the marketplace, and yesterday, they revealed an upgraded version of the product - the Pixel Buds Pro with a heavy focus on active noise cancellation. The new earbuds come with sensors that measure ear canal pressure, utilizing a technology called SilentSeal. They're designed to provide a tight seal that allows comfort and zero interruptions from the outside world. Additionally, the earbuds have a price tag of $199 and are up for preorder on July 21st.

A clear upgrade from the previous model, the earbuds are expected to rival Apple's groundbreaking AirPods. AirPods have been a revelation for Apple, and we see people sporting them everywhere. With AAPL's version of the product becoming such a hit, it bodes well that GOOGL is further pushing boundaries within its earbuds.

Share Performance & Quarterly Results

It's no secret that 2022 has been rough for this tech giant's shares. Soaring inflation, surging energy prices, and a hawkish Fed raising interest rates have negatively impacted the share performance year-to-date. The year-to-date chart below illustrates just that.

In fact, it's been a rough past year in general for GOOGL shares. Shares are hanging on by a thread in the positive, providing investors with a slight 2% gain. However, GOOGL shares have shown a higher blend of defense than the S&P 500 during this same time, which does bode well.

Over the last four quarters, the tech giant has crushed EPS estimates by double-digit figures three times. Although, in its latest quarter, the tech giant missed earnings expectations by 4.2%, snapping a streak of seven consecutive earnings beats. Earnings are expected to tick up a marginal 0.4% for the current year.

Quarterly revenue in the latest report came in just under expectations, missing the consensus estimate by a slight 0.2%. It shocked the investing world, as GOOGL hasn't missed revenue expectations since early 2020. Additionally, revenue for the current year is expected to surge 16% year-over-year from $212 billion to a mighty $246 billion.

Final Thoughts

Although it's been a trying time for GOOGL investors throughout 2022, there are plenty of things for investors to look forward to that can breathe new life into shares. Products that will rival AAPL in the wearables space are a big plus; Apple has massively benefitted in this area over recent years, driving top-line growth. Google will undoubtedly benefit from taking the arena head-on.

An upcoming stock split and recent share buybacks are two additional reasons investors can remain confident in the company. These strategies are very shareholder-friendly moves that will soon pay off for GOOGL. Additionally, the tech-rout can't last forever. The future looks bright for the company.

Alphabet is a Zacks Rank #3 (Hold) with an overall VGM Score of a B.

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