by winston » Fri Mar 14, 2025 10:47 pm
vested
Alphabet
Inclusive of Google, YouTube, and Google Network, 75% of its $96.5 billion in fourth quarter sales trace back to advertising.
If businesses become skittish about the U.S. or global economy, it could directly affect Alphabet’s core revenue driver.
There’s also concern about how the Trump administration will approach regulating big tech companies. The U.S. Department of Justice is calling for a breakup of Alphabet, which would see the company divest its leading search engine, Google.
Once again, while these headwinds are headline-grabbing for the moment, they aren’t altering the company’s aggregate long-term growth projections.
Alphabet’s foundation continues to be its advertising platforms. Even with plenty of competition, Google has maintained an 89% to 93% monthly share of global internet search over the trailing decade.
Lengthy periods of economic expansion suggest Google’s ad-pricing power will be strong, more often than not.
But what’s most exciting about Alphabet is its cloud service infrastructure platform, Google Cloud.
Tech firm Canalys estimates Google Cloud has secured an 11% share of worldwide cloud-service spend, as of the fourth quarter. This is excellent news considering businesses are still in the very early stages of ramping up their cloud spending and incorporating artificial intelligence (AI) into the mix.
Google Cloud is a significantly higher-margin segment that’ll be a key cash-flow driver in the latter-half of the decade.
While the stock market is historically pricey, the recent dip in Alphabet’s stock has lowered its forward P/E ratio to just 16. This represents a 28% discount to its average forward-year earnings multiple over the trailing half-decade.
Source: TMF
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
