GOOGL Alphabet Inc

By Alexander Osipovich 

Shares of Google parent Alphabet Inc. lagged behind other big technology companies last year, but they have rallied to start 2020 as investors expect new Chief Executive Sundar Pichai to put his stamp on the tech giant.

Alphabet stock was up 2% in afternoon trading Monday, boosted by an analyst upgrade, outperforming the broader market .

The company's shares are up 3.7% so far this year. By comparison, Apple Inc. has gained 1.5% in 2020, while Facebook Inc. has risen 2.6% and Microsoft Corp. is up 0.3%.

If that pattern holds, it would mark a reversal from 2019. Alphabet shares rose 28% last year, an impressive performance by any measure. But most of Alphabet's peers did even better: Apple rallied an astonishing 86% in 2019, while Facebook gained 57% and Microsoft climbed 55%.

Monday's gains in Alphabet shares were fueled by a bullish note from Pivotal Research Group, which upgraded the company's stock to buy from hold. The research firm said it expected Mr. Pichai to share more of Alphabet's wealth with shareholders, either by increasing buybacks or potentially instituting a dividend payment for the first time in the company's history. The note also highlighted growth opportunities in areas such as cloud computing.

"We don't have a crystal ball as to what happens in the Pichai regime -- but when thinking rationally, we see many reasons that a change is going to come with management alignment with shareholders," Pivotal analyst Michael Levine wrote in the note detailing the upgrade.

Alphabet investors face a variety of risks, including antitrust scrutiny from the U.S. government. The company's online-advertising revenue may also be vulnerable to broader macroeconomic headwinds if tensions in the Middle East spook the markets.

Mr. Pichai took over as CEO of Alphabet last month after the company's co-founders Larry Page and Sergey Brin stepped back from active management of the business. Mr. Pichai had previously been CEO of Alphabet's core Google unit.

Many observers expect Mr. Pichai to focus on Alphabet's lucrative advertising business instead of "moonshot" bets like building self-driving cars.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com

(END) Dow Jones Newswires

January 06, 2020 14:08 ET (19:08 GMT)

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