The stock price of Alphabet Inc (Nasdaq: GOOG), Google’s parent firm, is one of the highest of any technology company in the world. In fact, it’s likely one of the first names to come to mind when you mention “Big Tech.” Without a doubt, Alphabet Inc. deserves to be considered among the very best of all time.
Have you missed the opportunity to invest, though? In 2021, Alphabet investors saw returns of 66.8 percent, significantly more than the market average of 20.2 percent. Many are questioning if they lost their chance to buy after such a meteoric rise, but the good times may still be ahead.
Do you want to purchase Alphabet (Google) stock?
On Wall Street, Alphabet stock is almost certainly a hot commodity. ETF.com reports that 335 ETFs hold shares in the company.
In addition, GOOG is one of the most actively traded stocks, with over 1 million shares changing hands during a typical trading day. But is it worth it to you to make the purchase?
Performance History of Alphabet Stock
There is a lot of precedent for Alphabet’s success. You would have about $511,000 now if you had invested $10,000 in the stock in 2004 when it was trading at around $54 per share. While the stock’s early adopters certainly reaped the rewards, more recent investors have also done quite well.
The stock price has increased by more than 240% in the last five years, easily outperforming the S&P 500’s return of 120% during the same time period. The stock has had one of its best years ever in the past year.
Alphabet stock was the best-performing growth stock of 2021, increasing in value by 66.8 percent. The run was more remarkable than any other climb we’d seen because of the unusual circumstances.
Although most growth stocks were hit by inflation worries and COVID-19-related supply chain difficulties during this period, you wouldn’t know it from looking at Alphabet’s share price.
The stock’s valuation is quite reasonable, even after considering its rapid rise in price. The forward P/E ratio of the company is 26, and it is selling at about seven times revenue for the coming year. In light of these measures, the stock appears inexpensive relative to other similar companies in the current technology industry.
Ecosystem That Is Unavoidable
What made Google, now known as Alphabet, so successful is not up for debate. As a result of the company’s efforts, they have created an environment from which customers have a very low chance of escaping.
As a unified ecosystem, it provides a wide variety of items that can be used in tandem with one another. Consumers who use Android phones are more likely to prefer Google services than those from any other company. This includes Chromebooks, Gmail, and Google Search.
Keeping the following in mind:
The most popular search engine worldwide is Google.
Google easily outranks any other search engine on the planet. Due to its widespread renown, its very name can be used as either a noun or a verb. You “Google it” if you don’t know the answer to a query.
Every day, Google processes about 5.6 billion searches. Just so you have some context, there are currently about 7.9 billion people on Earth. That’s enough people looking for anything every day to fill 70% of the world’s population, and it all happens at Google.
The Top Advertising Platform in the World
So it stands to reason that Alphabet would possess the most successful digital advertising company in the world, given that Google is the most popular search engine and Alexa ranks the most popular website.
Indeed, advertising income makes up well over 80% of total corporate earnings. It’s hardly surprising, however, considering that, according to Statista, Alphabet owns almost 18% of the global market for internet advertising.
Google and YouTube are two of Alphabet’s most popular sites, but the company also has a stranglehold on online advertising in general via its Adsense platform. Ad space on websites may be quickly and easily filled thanks to the platform’s ability to facilitate transactions between advertisers and publishers.
Alphabet, naturally, takes a cut of the action, which contributes to the company’s market dominance in online advertising and overall revenue.
The dominance of mobile phone operating systems
Of all smartphones, the Apple iPhone is undoubtedly the most well-known and widely used. While iOS is the most widely used desktop OS, Android, which is owned by Alphabet, is the clear frontrunner when it comes to mobile devices.
With only 29.24% market share, iOS is behind Android by a significant margin, according to Statcounter’s estimates.
The OS helps retain users within the Alphabet ecosystem by encouraging the usage of other Alphabet products like Gmail and Google Search, as well as the sale of in-app purchases through the Google Play store, which generates income for the operating system.
The most popular email service is Gmail.
According to TechJury, Gmail accounts for more than 27% of the market share among email clients. More than 25% of the world’s population with an email address relies on Gmail.
Of course, this also means that Alphabet will earn more money from advertisements and that it will have one more successful product that will retain consumers within its blooming environment.
Cloud computing with Google
With the release of the Google Cloud platform, Alphabet is also rapidly expanding into the cloud computing market. Statista reports that the service is third in market share, at 9%, behind industry leaders Microsoft Azure and Amazon Web Services (AWS).
On the other hand, Google Cloud’s market share has been steadily increasing, and there’s no sign of that trend slowing down anytime soon. Because Alphabet has drastically reduced the fees it charges for its services, many large customers are making the switch to Google Cloud.
Customers of Google Cloud include PayPal, Home Depot, and Twitter, with more anticipated to join them in the near future.
Google Cloud’s contribution to Alphabet’s top line is expected to increase significantly as the cloud computing market expands and Google continues to gain market share from the two established market leaders in the sector.
Gaining Market Share in Chrome
Adding to the already massive scale of the Alphabet ecosystem is Chrome, the company’s operating system, and web browser for laptop computers.
The Chrome OS provides security without the need for additional antivirus software, and the Chrome browser improves security regardless of the operating system you’re using. They are both quite quick, which is sure to please the customer.
There are no costs associated with using Chrome, and it works flawlessly with the other products and services offered by Alphabet.
Resilience is Produced by This Ecosystem
Alphabet’s outperformance of the market last year, over the past five years, and throughout its history may be attributed in large part to the ecosystem described above.
To ensure that its customers always have access to the products and services they require and the peace of mind that comes from dealing with a reputable company, the company has developed an integrated system.
Chrome makes using an Android smartphone to browse the web easier, Gmail syncs more smoothly, Google Search is the default, and Android devices can often sync with one another.
Here’s when a robust economy comes in handy. Companies will always spend money on advertising in the hope of attracting new clients, regardless of the economy or the situation of the market.
Consumers will perpetually look for ways to enrich their lives through amusement, education, and comprehension. The Alphabet ecosystem includes both of these components, which allows it to thrive regardless of the state of the economy as a whole.
Opinions of analysts
It is obvious that I hold an optimistic view of Alphabet, but I am not alone in this. Every single expert who follows the stock agrees that it is one of the greatest in the market.
TipRanks reports that seven analysts cover the stock, but none of them currently have a Hold or Sell recommendation for the stock. Every single analyst who has provided coverage has suggested that investors buy Alphabet.
The price projections that analysts have made for the stock are just as appealing. Over the next year, the stock’s value is predicted to increase anywhere from $3,000 to $3,500, with $3,500 being the greatest estimate and $3,000 the lowest.
The consensus price objective for the company is set at $3,287.14, indicating a possible annual gain of 18.61%.
Alphabet is a stock that can be found in the portfolios of nearly any investor today due to its reasonable price, market domination across all of the company’s endeavors, and the thriving ecosystem it has created. It’s not if you should put money into the stock portfolio, but how much.
Several considerations should be taken into account before making a final call. Investing more heavily in Google shares could appeal to you.
- You Wish to Put Money Into Technology. Alphabet is, at its heart, one of the largest technology companies in the world and a publicly traded company. This is a good stock to buy in bulk if you want a large percentage of your investment portfolio to be dedicated to technology.
- You’re Interested in Developing Your Wealth and Increasing Your Assets. If you’re looking for a stock that can provide growth and value, look no further than Alphabet. The stock’s performance has been remarkable, but the company’s expansion has helped keep valuation metrics in check. That being said, GOOG is a fantastic company to consider buying in bulk whether your priority is growth, value, or some combination of the two.
- Forget About Dividends, You Don’t Give a Damn. Alphabet is an excellent investment for many sorts of investors, but income investors who are seeking a steady stream of income from their portfolio may want to limit their exposure to the firm. In its history, Alphabet has never distributed a dividend, and it currently shows no signs of doing so.
All things considered, Alphabet is a fantastic company to add to your portfolio. The firm has historically dominated whatever market in which it has competed. Meanwhile, its stock outperformed all expectations when it was first made public in 2004.
In addition, analysts find it to be invaluable. But you shouldn’t just accept my word for it or the word of any other expert. At the end of the day, your investment choices will either add to or detract from your wealth. No, you can’t take that one easy. Do your own research and come up with your own conclusions at all times.