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Will Google Inc (GOOG) Follow Apple Inc. (AAPL)’s Swan Dive?

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If you have paid any attention to the stock market over the past several months, you are familiar with the saga of Apple Inc. (NASDAQ:AAPL)‘s fall from glory. After temporarily grabbing the title as the world’s biggest company by market capitalization and setting a new all-time high of $705.07 per share the day the iPhone 5 was released, the stock has plummeted 36%. With Friday’s session taking the Dow above 14,000 for the first time since October 2007, Google Inc (NASDAQ:GOOG) closed the week at a record high $775.60 per share, having touched $776.70 earlier in intraday trading. Will the tech giant follow Apple’s example, or can it push higher?

Google Inc (NASDAQ:GOOG)Google earnings
Google Inc (NASDAQ:GOOG) reported earnings on Jan. 22, providing the catalyst for the current upswing to the new high. The company surpassed the Thompson Reuters consensus estimate of $10.42 of EPS on $12.34 billion of revenue; the search king reported EPS of $10.59. Net income was up to $2.89 billion from $2.71 billion a year ago. With a year-over-year rise in revenue of 36% based on consolidated Google-Motorola results, the stock climbed 5% on the news.

Google Inc (NASDAQ:GOOG) saw a 6% fall in the average cost per click that it was able to charge customers. Offsetting this negative was the fact that total clicks jumped 24% on a year-over-year basis and 9% sequentially. Google Inc (NASDAQ:GOOG) is finding growth in advertising — particularly in the mobile segment — even as other critical areas continue to march ahead. Estimates place mobile search ads as accounting for roughly 35% of the company’s value. Furthermore, EMarketer reports that Google Inc (NASDAQ:GOOG) commanded 41% of all digital ad revenue for 2012.

The analysts
Bloomberg reports that of the 33 analysts surveyed, three-quarters rate the stock a buy, though the average price target has only increased from $796.66 to $824.83. This is a far cry from the stratospheric price targets that were set for Apple after its stock breached the $700 level; some predicted Apple would quickly rise to $900, $1,000, or above. You should see this as good news because it suggests that these analysts are making realistic projections about where the company can go from current levels.

Apple was up roughly 34% for 2012 and looking for another banner year in 2013. When the momentum and hysteria of the masses sets in — i.e., Apple price targets calling for the stock to breach $1,000 without taking a breather — it is time to get worried. I do not believe that any stock can go in one direction forever, but when I suggested $700 meant it was time to sell Apple, the faithful had several not-so-choice words for me.

In the case of Google, the diversified nature of the company’s business lines is a significant positive, and one of the reasons I think the company is the true king of tech. Even with that in mind, you should not be surprised to see the stock take a breather at some point. Particularly as the Dow knocks on the door of its own all-time high, a small correction in Google stock should be seen as a positive (and a potential buying opportunity).

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