Alphabet is one of the most influential companies in communication sector. But this is not the only reason why we have included this stock into our Global top 5 social media list. With its unprecedented reach of customers as a global leader in web search engine and owning second largest social medium – Youtube, it must be in search bar of all web and technology-oriented investors. In this analysis, we aim to examine this stock more deeply.
What does Alphabet do?
First of all, Alphabet is a holding company, meaning it mainly just owns company Google that we are all familiar with. However, the company also engages in software, health care, transportation, and other technologies. The company was founded by Lawrence E. Page and Sergey Mikhaylovich Brin on October 2, 2015, and has headquarters in Mountain View, California. According to the yearly report, Alphabet operates through the following three segments of business: Google Services, Google Cloud, and Other Bets.
The Google Services segment includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. This segment is responsible for bringing almost 90 % of the yearly revenue of the company.
The Google Cloud segment refers cloud computing services including computing, data storage, data analytics, and machine learning, alongside a set of management tools.
The Other Bets segment relates to the sale of healthcare-related services and internet services.
Two most crucial parts of its business are Google Search and social platform Youtube.
Google Search is a tool that enables users to explore the internet by inputting keywords or phrases. Utilizing algorithms, Google analyzes and ranks websites according to their relevance to the search query. Renowned as the most widely used search engine globally, Google generates revenue through personalized advertising and the sale of virtual ad space.
Youtube is an online video sharing and social media platform. Similarly, as Google search it generates revenue selling ad space.[1]
Alphabet and AI
Since we now understand Alphabet’s business model, we can look for possible appraisal of investor’s money. The good news is that Google has not yet seen boom in AI such as Nvidia or Meta. The company is still incorporating newest tech boom to target personalized advertisement that has potential to bring the stock price to new heights.
In addition, Google aims to counter Microsoft’s investment in artificial intelligence by making its own generative AI tools available. One big question is how much will be integrating chatbot AI technology into search queries impacting advertising revenue. In December 2023 Google unveiled its much anticipated language model called Gemini.[2]
Possible ban of TikTok in United States
The United States has moved closer toward banning TikTok, after the House of Representatives passed the bill on March 13th. The bill demands that the app’s Chinese developer ByteDance would sell the company or face removal from US app stores.
Youtube has similar function as Tiktok – allowing creators to share short videos. If the largest short video social platform would end in US, its users would also join Youtube. Therefore, this ban would boost Alphabet’s Youtube brand, it’s new and active users and consequently revenue.[3]
Increasing ad revenues through E-commerce
Alphabet also aims to boost its advertising business through e-commerce-related internet search. The company has introduced the Performance Max advertising platform. It automates buying ads across YouTube, internet search, display, Gmail, maps and other applications. Performance Max lets advertisers manage campaigns across all Google ad inventory.
This will help gaining more customers to companies that buy ad space from Google that will attract even more advertisers.[4]
Financial analysis
Alphabet stock is popular among investors also due to its ever-rising ability. * The ad revenues and profits are consistently increasing that is being reflected in the stock price. Revenue in 2023 went up by 9,36 %, that is the average for this stock. Profits increased in 2023 by 23,05 % that is also consistent with the long-term average. **
From technical analysis point of view, Alphabet stock is currently (March 28, 2024) strong by. For daily periods the Relative strength index is on 64,8 and other indicators like MACD, ADX or CCI are also sending buy signals. **
Buying signals are also observed on Moving average indicators where 50, 100 and 200 daily periods show potential for increasement in price. **
Conclusion
Alphabet stock is currently trending. There are several reasons for rapid growth in following months mostly due to AI technology boom. Company is also healthy from financial point of view, delivering almost double-digit revenue growth and significant increasement in profits. Technical indicators are also alerting investors to buy this stock. Join other investors on Gulf brokers platform to not miss out this opportunity. **
Syam KP, Analyst of Gulfbrokers
* Past performance is no guarantee of future results.
** This is a current state that may change
[1] https://www.marketwatch.com/investing/stock/googl?mod=mw_quote_tab
[2] https://www.investors.com/news/technology/google-stock-buy-now/
[3] https://www.aljazeera.com/news/2024/3/14/why-has-the-us-passed-a-bill-to-ban-tiktok-and-whats-next
[4] https://www.investors.com/news/technology/google-stock-buy-now/
