What happened
Shares of Alphabet (GOOG 0.88%) (GOOGL 0.61%) were up in March. The stock benefited from some analyst upgrades, the increasing risk that TikTok would be banned in the U.S., and the perception among some investors that the stock was undervalued.
According to data from S&P Global Market Intelligence, Alphabet stock finished the month up 15%. As you can see from the chart below, those gains came in the second half of the month. This was due to the run-up to the TikTok hearings and a recovery in the broad market following the collapse of SVB Financial‘s Silicon Valley Bank.
GOOGL data by YCharts.
So what
There was no singular reason for Alphabet’s gain last month. Rather, a variety of factors combined to send shares of the tech giant higher, especially after the stock had struggled earlier in the year with the increasing threat from Microsoft and ChatGPT.
Alphabet stock rallied the week of March 13 as stocks rebounded in the aftermath of the Silicon Valley Bank collapse and other news items, including a report from Bank of America showing that the increase in interest in Microsoft’s Bing since its announcement that it would integrate ChatGPT features hasn’t impacted Google web traffic or search download activity, which has been stable since November.
The stock gained later in the week, seemingly helped by Meta Platforms‘ second announcement of layoffs. Amazon also announced a second round of layoffs last month, which could also encourage Alphabet to do the same.
Finally, the stock seemed to get a tailwind from the TikTok hearings, as a number of politicians called for the popular Chinese social media app to be banned from the U.S. A ban or another type of regulatory crackdown would be bullish for Alphabet and the rest of the social media industry as TikTok is a threat to YouTube and Google Search, as Gen Z is increasingly using TikTok as a starting point for searches.
Now what
To close out the month, Alphabet stock jumped on March 31 as CFO Ruth Porat promised that the company would continue to cut costs, fulfilling hopes that the company would slash expenses further after it issued layoffs back in January. After last-month’s gains, Alphabet stock now trades at a price-to-earnings ratio of 23, and analysts expect the company’s earnings per share to decline in the first quarter before returning to growth later in the year.
Given the recessionary headwinds in the ad market and the challenges from Microsoft and ChatGPT, Alphabet stock seems to be fully valued after the latest gains.