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Alphabet Fully Valued After Another Strong Quarter

Google keeps riding the digital ad wave, but we recommend investors wait for a wider margin of safety.

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Alphabet reported second-quarter results last night with revenue and earnings coming in above both our expectations and the consensus. The firm remains at the top of the digital advertising world with ad revenue continuing its double-digit growth. 

Alphabet is also progressing toward diversification as seen by growth from the firm's cloud offering. However, continuing increases in traffic acquisition costs, along with decline in cost-per-click, remain a concern. We slightly upped our revenue estimates in our model, but that did not have an impact on our fair value estimate.

Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.