Google and its parent company Alphabet Inc. recently published their fourth quarter 2019 and full year 2019 results.
From Alphabet's recently published results a glimpse into the future of Google and its parent company is possible. For the first time Alphabet broke results of its YouTube property. Basically, the future growth drivers of Alphabet as things stand seem to be YouTube advertisements and Google Cloud revenues. Yes, the revenues from the Google search engine at 98.12 billion USD as of end 2019 comprise 60% of Alphabet's revenue for 2019, grew by 15% year on year in 2019 and are its main source of profits. YouTube advertisements revenue stood at 15.149 billion USD and Google Cloud revenue stood at 8.918 billion USD as of end 2019. However, YouTube advertising revenue grew by 35.8% year on year and Google Cloud revenue grew at 52.8% year on year in 2019 as can bee seen by Alphabet's 10-K form linked here: https://www.sec.gov/Archives/edgar/data/1652044/000165204420000008/goog10-k2019.htm
The future of Google and its parent company Alphabet seems to lie in growing its YouTube video advertising revenue and its cloud business. And this is hardly surprising. As I have written in previous posts, today's technology mega trends are video streaming watching and cloud services. Both videos and cloud services are powered by artificial intelligence, which is for today what the Internet was in 2000 and what oil was back for the petrochemical revolution back then. And I disagree a bit with Mark Cuban who says data is the new oil. Data is just a fuel that powers artificial intelligence algorithms. The new revolution lies in Artificial Intelligence.
And although google search engine revenue will remain the main revenue base and a cash cow for Alphabet in the next 10 years, YouTube advertisements and Google Cloud, both powered by artificial intelligence, is what Alphabet should and seems to be staking its future on. The economics of the respective businesses are making it clear. The growth of the internet advertisements market is slowing to about 17.6%, while the global cloud business is growing by circa 20% and amounts to 214.4 billion US in 2019, according to Gartner as can be seen from the link below. Video advertising is growing currently by 10%, but Alphabet commands a large ang growing market share.
https://www.gartner.com/en/newsroom/press-releases/2019-04-02-gartner-forecasts-worldwide-public-cloud-revenue-to-g
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