The AI trade has come under significant pressure. In fact, we are witnessing the most aggressive tech outflows since February. But this is a great time to hunt for deals. One attractive AI stock that just shattered earnings is Alphabet Inc. (GOOGL), highlights Lucas Downey, co-founder of MoneyFlows.
The search and cloud giant has grown to a $4.2 trillion market cap. But over the past three months, shares have dropped 12.5%. This sent its price-to-earnings ratio to a lowly 19.6X.
Alphabet's recent Q2 earnings report saw sales jump to $119.8 billion, easily beating estimates of $117 billion. Earnings per share came in at $9.11, easily besting consensus of $2.88. The big news was the boosted FY 2026 capex, which was revised up to $200 billion at the midpoint.
That’s not the exciting part. It’s the analysts’ upward revisions to revenue that makes this a compelling long idea. FY 2026 revenues are now estimated to reach nearly $495 billion. FY 2028 sales were revised higher to nearly $720 billion!
But to seal the deal on a great stock, we need to understand the supply and demand picture. Institutions have loved GOOGL all year with plenty of green inflows. The recent tech wreck has triggered an outflow. I believe this represents a great buy-the-dip opportunity.
The last time GOOGL shares logged a red signal was late March…right before staging a powerful climb. Note the constant appearance on our Outlier 20 report (blue bars). That’s the stairway to heaven formation.
Pullbacks are part of the game. Prior institutional favorites often revert back to leadership position once liquidations subside.
Recommended Action: Buy GOOGL.
