Alphabet was named high large tech inventory of the 12 months – here is why


Sundar Pichai, CEO of Alphabet, on January 20, 2020 in Brussels, Belgium.

Geert Vanden Wijngaert | Bloomberg | Getty Images

Alphabet is close to closing its best year since 2009 from an investment perspective and has proven to be by far the best-performing big tech stock of 2021.

At the closing price on Thursday at $ 2938.33, Alphabet stock is up 68% this year. With only five trading days left in 2021, it’s virtually impossible for one of its biggest competitors to catch up.

Microsoft is closest at 51%. Apple grew 33%, followed by Facebook (now Meta) with 23% and Amazon with 5%. You can even add Tesla, which is up 51% over the year. The Nasdaq 100, a basket of the largest non-financial companies on the Nasdaq, is exactly in the middle with a plus of 27%.

Alphabet, which derives most of its revenue from Google’s advertising business, has proven resilient and resistant to recent inflation concerns during the Covid pandemic. Consumers have increasingly turned to web and mobile search, maps, and YouTube videos, and Google’s growing cloud infrastructure unit has benefited from the explosion in remote working.

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In its earnings report for the third quarter of October, Alphabet reported a 43% increase in ad revenue to $ 53.1 billion and a similar increase in YouTube ad revenue to $ 7.2 billion. The result exceeded the analysts’ estimates.

While other ad-based internet companies like Facebook and Snap have been dragged down by Apple’s iOS privacy changes, Google has held up better, thanks in part to its control over the Android operating system and lack of dependence on Apple.

For the full year, sales are expected to grow 39% to 254 billion US dollars, according to the average analyst estimate in a refinitive poll. That would be the fastest growth since 2007 and follows a year with only 13% expansion, since the Google parent company expected a brief decline in sales for the first time in the second quarter of 2020.

In early 2021, Google’s search business began to grow before the pandemic Level, driven by a rebound in advertising. Countries began to reopen and consumers looked more for products and travel options while spending extra time on YouTube, which, according to the Pew Research Center, saw the most significant growth of any social media app among American users during the pandemic.

“Alphabet’s recovery from the COVID-19-induced advertising crisis in Q220 was remarkable,” Argus analysts wrote in a report released in late October. The company has a Buy rating, writing, “We see continued momentum in the quarters ahead as e-commerce and digital advertising flourish with the economic recovery.”

The last time Google gave Wall Street better returns was 12 years ago, when its stock more than doubled for the year. Google was a much smaller company at the time, and its market cap didn’t reach $ 1 trillion until January 2020.

Less than two years after hitting this milestone, Alphabet added nearly another $ 1 trillion, reaching nearly $ 2 trillion in mid-November. Market capitalization was at $ 1.95 trillion at the close of trading last week.

It’s not just about advertising.

Google’s cloud division revenue rose 45% to $ 4.99 billion in the third quarter, while operating loss decreased to $ 644 million from $ 1.21 billion a year ago. Google Cloud Platform lags behind Amazon Web Services and Microsoft Azure in the cloud infrastructure market, but is benefiting from an emerging multi-cloud trend as large organizations spread their workloads rather than relying on a single provider.

Alphabet also generated high returns from its investment arms GV and CapitalG. Portfolio companies such as UiPath, Duolingo, Freshworks and Toast went public this year. Alphabet posted capital gains of $ 188 million for the third quarter, up from $ 26 million a year earlier.

Freshworks CEO Girish Mathrubootham on Nasdaq


Looking ahead to 2022, analysts’ outlook is more subdued, and Alphabet may need to find new growth drivers to continue its outperformance. Sales growth is expected to slow to 17%, roughly at the level of 2019, before the pandemic.

In the meantime, investors are still waiting for some progress from the Other Bets alphabet. His self-driving automaker Waymo continues to lose a ton of money despite making strides in new cities in 2021. Alphabet continues to consolidate other projects that couldn’t break out, and recently announced that its foldable Sidewalk Labs, its smart city effort, was in Google.

CLOCK: Gene Munster on technology gains

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