For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Alphabet (
GOOGL Quick Quote GOOGL - Free Report) ten years ago? It may not have been easy to hold on to GOOGL for all that time, but if you did, how much would your investment be worth today? Alphabet's Business In-Depth
With that in mind, let's take a look at Alphabet's main business drivers.
Alphabet is one of the most innovative companies in the modern technological age. Over the last few years, the company has evolved from primarily being a search-engine provider to cloud computing, ad-based video and music streaming, autonomous vehicles, healthcare providers and others.
In the online search arena, Google is a monopoly with more than 94% of the online search volume and market. Over the years, the company has witnessed increase in search queries, resulting from ongoing growth in user adoption and usage, primarily on mobile devices, continued growth in advertiser activity, and improvements in ad formats.
The company is gaining market share in the cloud-computing, driven by continued strength in Google Cloud Platform and G Suite offerings.
Alphabet also enjoys a dominant position in the autonomous vehicles market, thanks to Waymo’s relentless efforts. Also, it has bolstered its footprint in the healthcare industry with its life science divison, Verily.
The company has also become a renowned name in the world of entertainment. YouTube came up with $20 billion advertising revenues in 2020.
Total revenues were $182.5 billion in 2020. The company reports revenues under three broad heads, Google Services, Google Coud and Other Bets, which generated 92%, 7% and 3% of total revenues, respectively.
The Google Services includes products and services such as ads, Android, Chrome, hardware, Google Maps, Google Play, Search, and YouTube.
Google Cloud includes Google’s infrastructure and data analytics platforms, collaboration tools, and other services for enterprise customers.
Other Bets is a combination of multiple operating segments that are not individually material. Alphabet has many competitors in the form of internet pioneers, streaming platforms, technology giants, cloud computing and customer relationship companies. Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Alphabet a decade ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in June 2011 would be worth $9,239.52, or a gain of 823.95%, as of June 9, 2021, and this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 230.37% and gold's return of 17.77% over the same time frame.
Going forward, analysts are expecting more upside for GOOGL.
Alphabet's strengthening cloud unit is aiding substantial revenue growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space as reflected by the first-quarter results. Further, major updates in its search segment are enhancing the search results. Moreover, Google’s robust mobile search is gaining solid momentum. Additionally, strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term. Further, its deepening focus on wearables category remains a tailwind. Notably, Alphabet has outperformed its industry year to date. However, its growing litigation issues and increasing expenses might hurt profitability. Further, the company faces persistent pressure from advertisers to tighten controls on YouTube video service. This remains a concern.
Over the past four weeks, shares have rallied 5.66%, and there have been 15 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.