Alphabet Stock Enters Oversold Territory — Is It A Buying Opportunity?

Alphabet, Inc. GOOG GOOGL stock is down more than 13% since the end of January and has now entered oversold territory. 

What To Know: Alphabet's relative strength index fell to 29.17 on Thursday, its lowest since September 2024. The stock's RSI rebounded slightly on Friday to 29.51 at the time of publication, but remains below the 30 level traditionally used to mark a stock as "oversold." 

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The company faces multiple headwinds that may have sent investors running for the exit. Here's a look at some of Alphabet’s recent challenges: 

Q4 Revenue Miss: Alphabet’s fourth-quarter earnings report released Feb.4 showed a slight miss in revenue, particularly in its cloud division. The shortfall, in a key growth area, raised concerns among investors and the stock dropped about 7% the next day. 

Regulatory Pressures: Alphabet faces several legal challenges, including an ongoing antitrust case with the Department of Justice that is expected to be settled in mid-2025 and could result in the divestiture of key business segments, including Chrome and Android.

Additionally, China announced an antitrust probe into Alphabet in early February and the company is under investigation by the European Commission for potential violations of its Digital Markets Act. 

AI Competition: Google faces potential threats to its search dominance from emerging AI technologies like OpenAI and DeepSeek. The company has initiated rounds of layoffs in order to reallocate spending toward AI research and development.  

Alphabet also announced a significant increase in capital expenditure from $58 billion to $75 billion for the current year, much of which is AI-focused. 

Time To Buy? 

Some analysts view Alphabet's current oversold status as a buying opportunity given the stock has a strong balance sheet and is trading at a lower multiple compared to other Big Tech names.  

The three most recent analyst ratings have an average price target of $226.67 between them, with an implied 31.74% upside for Alphabet shares. 

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