Shares of internet tech giant Alphabet (GOOG 0.74%) (GOOGL 0.55%) exploded as much as 10% higher in Nasdaq trading Wednesday, before settling down to about an 8% gain in the afternoon.
Of course, even just an 8% gain in a company that's worth nearly $2 trillion works out to Alphabet stock being about $160 billion more expensive today than the stock was yesterday. And when you realize this, the question naturally arises: Is it now too late to buy Alphabet stock?
If you ask Wall Street, the answer is a resounding no.
Image source: Getty Images.
It's been less than 24 hours since Alphabet reported its fourth-quarter numbers, but according to TheFly.com, already about a dozen separate analysts have rushed out reports raising their price targets on Alphabet, with each and every one of them urging investors to buy Alphabet stock.
The reasons should be obvious. In yesterday's report, Alphabet boasted that it grew sales 41% year over year in fiscal 2021, and nearly doubled its net profit -- up 91% year over year at $112.20 per share. Operating profit margins were a robust 31% for the year, despite coming in a bit below that level in Q4 alone (when profit margins were 29%, and earnings growth "only" 38%).
Even 38% profits growth, however, makes Alphabet stock look incredibly attractive at its current P/E ratio of 26.6 -- if, that is to say, Google can keep on growing at 38%.
Problem is, Alphabet management did not make any promises on how fast it expects to grow in the future. Indeed, analysts who follow the stock are predicting Alphabet will grow at closer to 18% annually over the next five years, according to data from S&P Global Market Intelligence.
That's still pretty brisk growth, however. Maybe even fast enough to roll the dice on Alphabet stock at 26.6 times earnings.
