Even though most of big tech has had a rocky year, shares of Google have been powering ahead. The search giant is now above $870/share, marking a nearly 40% gain over the past 12 month period.
This is in stark contrast to many other names in the technology world, such as Apple (AAPL - Analyst Report), Microsoft (MSFT - Analyst Report) or even the broad technology sector (XLK - ETF report) in the same time frame, as all of these options have paled in comparison to Google’s return as of late. Thanks to this, many are now looking to GOOG as the leader of the technology world and the best hope for growth among the tech giants.
However, it is worth noting that GOOG could be facing some headwinds in the near future. Some analysts are worried that search revenue could be in trouble—as more consumers just buy on Amazon (AMZN - Analyst Report) instead of searching for a product on Google—and that other avenues haven’t really paid off yet for the company.
After all, the company is trading at a somewhat lofty forward PE of 22, which seems a bit high for a nearly $300 billion company that already has a stranglehold on its only real market. Analysts are also mixed on the prospects in the near term, as the stock has a Zacks Rank #3 (Hold) with EPS growth of just 2% predicted for this quarter.
Change on the horizon?
Clearly if GOOG is going to continue to surge it will need to find new ways to grow beyond desktop search and android phone adoption. One such way that many are banking on is via Google Glass.
Google glass is basically a wearable computing device that one utilizes like glasses. It will run on an android operating system and allow users to access a number of Google applications, take videos and pictures, and run third-party apps as well.
Although the product is still in development, many analysts and journalists have already developed strong opinions about the product, its likely sales figures, and the widespread adoption of the device.
On the high side, some are terming Glass as a gamechanging product that could sell as many as 6.6 million units a year in 2016. Meanwhile, others are much less optimistic, declaring that ‘nobody likes Google Glass’ and that the sales estimates will fall well short of estimates.
Personally, I am more apt to believe in the high side estimates and that Google Glass will be a key part of many consumers’ technology lives, and a major part of Google’s growth going forward. The possible uses for the product are limitless, with potential applications in industries like the military, health care, and education just to name a few.
Still, many remain deeply skeptical of the product, predicting that its adoption will be slowed by people not wanting to look ‘stupid’ wearing them (kind of like how some view those who use Bluetooth headsets). Or that Glass will basically be a ‘Segway’ redux; a technological innovation billed as the next big thing that only has found its way into niche markets.
But what do you think? Is Google Glass going to be a transformative product and a key aspect of GOOG’s lineup, or a Segway-like flop?
And, does this product change how you feel about Google’s stock going forward?
Let us know in the comments below!
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