Alphabet shares have had to fight their way through some ups and downs over the past 12 months, but have repeatedly shown comeback qualities. Although the headlines mostly belonged to others, it was also able to increase by over 60 percent during this period, including the 12 percent jump according to the figures presented after the market closed yesterday.
Google earns the money for the AI fantasy
With the search engine Google and the associated advertising business, Alphabet has the successful cash cow in the group and, in combination with the opportunities offered by artificial intelligence, there are many small bets on the future. On the one hand, the majority of the company’s revenue still comes from advertising, both on Google Search and, to a lesser extent, YouTube. On the other hand, management is trying to position the company in the application of AI so as not to be displaced by emerging companies in the future. While Google’s Gemini chatbot is already a compelling product, it remains to be seen how it will be monetized.
At least the product did not play a role in the quarterly figures reported yesterday after the stock market closed. They were still more than impressive. 15 percent sales growth to 80 billion US dollars, increasing profits by almost 60 percent compared to the previous year.
Advertising remains the key to success at Alphabet
Google continues to dominate the global online search market with a share of over 90 percent and generates very strong cash flow year after year. So far, growth has not been disrupted, despite Microsoft’s move to integrate generative artificial intelligence into its search engine Bing. Rather, advertising remains the key to success for Google. Sales continued to rise in the first quarter, increasing by 13 percent to $61.7 billion. The video subsidiary YouTube contributed a good eight billion dollars, an increase of around 21 percent compared to the previous year.
Google’s successful cloud business
Google’s cloud platform now also plays an important role and has become the group’s second pillar. The company has steadily increased its market share in this space over the past few quarters, resulting in additional revenue growth and greater operating leverage. Alphabet is well prepared for the future. The biggest problem is probably the antitrust disputes and a possible break-up if there is too much market power in the future.
Still a lot of future dreams
Most of Alphabet’s futuristic projects aren’t generating revenue yet. Autonomous car technology division Waymo is a good example of this. According to various studies, it could open up a market worth tens of billions of dollars in the next 10 to 15 years.
Dividend as icing on the cake
As the icing on the cake of yesterday’s figures, investors were served a dividend policy from Alphabet. There will be 20 cents per share for the first time in the company’s history and it won’t stay that way. The days in which growth companies did not pay out money to their shareholders are definitely over. Perhaps even more reason to take a closer look at these already successful stocks.
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