Google is primed for significant gains ahead. Using options to capture the potential pop
Alphabet (GOOGL) stands out as a compelling opportunity leveraging its dominant position in search, advertising and cloud services. With AI innovations and Google Cloud driving future revenue growth, its valuation positions GOOGL for significant upside. With implied volatility offering attractive premiums, this setup presents a compelling case for adding bullish exposure in a tech-driven market using options. Trade timing The timing for adding bullish exposure to GOOGL is optimal, as the stock recently broke above its $165 resistance level and recently pulled back to its $165 support. This has been coupled with a recent outperformance relative to the S & P 500 and offers an attractive risk-to-reward profile for adding long exposure. Fundamentals GOOGL trades at a compelling valuation compared to its industry, supported by superior growth and profitability metrics, reinforcing its investment appeal. Forward PE ratio: 17x vs. industry average 19x Expected EPS growth: 13% vs. industry average 13% Expected revenue growth: 11% vs. industry average 12% Net margins: 31% vs. industry average 9% Bullish thesis Market leadership and financial strength: GOOGL dominates search, advertising and cloud services, with Q1 2025 revenue up 12% year over year and Google Cloud growing 28%. AI and cloud growth drivers: Gemini 2.5 serves 1.5 billion monthly users and boosted ad revenues, while Google Cloud's 270 million paid subscriptions (YouTube, Google One) diversify income streams. Stock repurchases: A $70 billion stock repurchase and a 5% dividend hike to 21 cents per share, suggest strong management confidence. Timing: The pullback after a breakout above its $165 resistance level provides an optimal timing with strong risk to reward for upside exposure. The trade With the IV Rank of 22%, options are relatively inexpensive, and I'm buying an Aug 15 $165/$185 call vertical @ $7.28 debit. This entails: Buying the Aug 15 $165 call @ $9.90 Selling the Aug 15 $185 call @ $2.62 The maximum reward is $1,272 if GOOGL is above $185 at expiration. The maximum risk is $728 if GOOGL is below $165 at expiration. The breakeven point for this trade is $172.28. View this Trade with Updated Prices at OptionsPlay. This strategy positions you to benefit from GOOGL's leadership in AI and cloud growth, aligned with its fundamentals and timing using a call vertical with a strong risk/reward ratio. With its dominant position in tech, this trade offers a compelling opportunity to capture upside potential as the S & P 500 targets all-time highs and beyond. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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