Why Did Alphabet Stock Drop Today?

Alphabet (GOOG 1.31%) (GOOGL 1.34%) stock slipped 2.1% through 11:25 a.m. ET Monday on broader market worries over war breaking out in Iran, and across the Mideast, over the weekend.

But isn’t there more reason to buy Alphabet stock today than to sell it?

Image source: Getty Images.

War in the Mideast, peace with Apple

Broad market jitters are understandable, but Alphabet actually may have good news for its shareholders today, with The Information reporting that Apple (AAPL +0.70%) has agreed to lease data center capacity from Google to support its Siri artificial intelligence service.

Apple and Alphabet jointly announced in January a “multi-year collaboration” through which Apple’s Apple Intelligence (i.e., Siri) service “will be based on Google’s Gemini models and cloud technology.” At the time, Apple stated that “Google’s Al technology provides the most capable foundation for Apple Foundation Models.”

Now it seems Apple thinks Google’s AI hardware infrastructure is pretty nice as well, and will pay Alphabet even more money to make use of it.

Today’s Change

(-1.31%) $-4.08

Current Price

$307.35

Key Data Points

Market Cap

$3.8T

Day’s Range

$301.08 – $307.69

52wk Range

$142.66 – $350.15

Volume

307K

Avg Vol

22M

Gross Margin

59.68%

Dividend Yield

0.27%

Is Alphabet stock a buy?

There’s no information in The Information on how much Apple will pay Alphabet to lease its servers. And honestly, it would take a lot of money to move the needle on Alphabet stock.

Valued at $3.8 trillion, Alphabet shares sell for 28.5 times trailing earnings today, and more than 51 times trailing free cash flow. Analysts have Alphabet pegged for 14% annualized earnings growth over the next five years, which isn’t a lot to justify such a high stock price.

Even with more money coming from Apple for data center leasing, I see Alphabet stock as overpriced today — and a sell.