Google Parent Alphabet, Amazon Bulls Keep the Faith Despite Bubble Fears
The AI trade has taken a beating, putting to the test the conviction of deep pocketed investors and speculators who have piled onto the Magnificent Seven stocks. Two big block trades signal continued confidence in $Alphabet(GOOGL)$
An active seller collected a $9.68 million premium for put options that give their holder the right to sell 125,000 Amazon shares at $290 each in 770 days. That trade could be profitable for the seller should the stock price climb above that strike price over the next two years, allowing the contract to expire worthless.
The optimistic scenario doesn't sound improbable to Wall Street analysts, whose average target price implies a 31% upside from its current level. Among them are the JPMorgan analysts including Doug Anmuth who see the stock climbing to $305 by the end of 2026.
Bulls' conviction is being put to a test as the Nasdaq came under pressure, weighed down by deepening fears over a bubble in the artificial intelligence space.
"$Amazon.com(AMZN)$
The analysts said these factors support the doubling in free cash flow to $59 billion even amid a capital expenditures growth driven by increased spending in building out its artificial intelligence (AI) infrastructure.
The JPMorgan analysts named Amazon among their top picks in the tech sector, along with $Alphabet(GOOGL)$
Within the first 20 minutes of trading Tuesday, an active seller got a premium of $856,310 premium for put options that give their holder the right to sell 421,000 Alphabet shares at $265 each over the next 70 days. That signals the seller's confidence that the stock price will hold above that strike price, allowing the contract to expire worthless by Feb. 20.
The seller isn't the only one bullish on Alphabet. Analysts who cover the stock see the share price rising to an average of $333.83 over the next year. About 87% of those analysts have a buy rating on Alphabet, and no one is advising clients to sell.
Even after a 64% rally this year that made Alphabet the best performer among the Magnificent Seven stocks, JPMorgan analysts are optimistic that the gains are far from over.
"GOOG/L is our top pick into 2026 as we expect AI leadership, full stack strength, data advantages, and global distribution to drive growth acceleration and margin stability,” the JPMorgan analysts said. “We believe Google can sustain low-mid-teens% Search revenue growth off a large base. AI Search should prove expansionary, driving greater query volumes, improved click quality, and higher prices, offsetting fewer clicks per query.”
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