Alphabet Inc., the owner of the ubiquitous google search engine, is valued on the stock market at 777 bln. USD. This is still a staggering sum, but quite a bit away from its recent high. Can Alphabet Inc. reach a one trillion USD market capitalization?
Yes, it can. Why? Because its main market - internet advertising is still growing with double digits and is projected to grow with double digits until 2022, when it should reach the staggering 518 billion USD. Until then Alphabet Inc. can grow its market capitalization through organic growth by just maintaining its market share. However, the data for 2018 shows Alphabet Inc and Facebook's combined share of the internet market is not growing as in previous years. This is mainly due to Amazon. Amazon developed its internet advertising business from scratch and is now a clear number three behemoth with above 10 billion USD in yearly revenue from internet advertising.
Alphabet's other efforts - mainly in autonomous driving - the Waymo project are showing bright future potential, but in the distant future. Actually, the name of the company was changed from Google Inc. to Alphabet Inc. mainly to show that its founders Larry Page and Sergey Brin could develop other avenues of revenue. Up till now, however, their efforts have not brought much success. The Google search engine display results still account for about 67% of revenue, other 16% come from third party properties display advertising shared revenue and another 17% come from other projects. Yes, Google cloud is the number four in the cloud as an infrastructure competition after Amazon, Microsoft and IBM, but its results and growth have not proved satisfactory, which lead to the ouster of the Google cloud former CEO.
So, yes, Alphabet Inc., the owner of the google search engine, could reach 1 trillion USD in market capitalization until 2022 based on purely internet advertising growth. But if Alphabet Inc wants to add even more value, cloud is the next frontier. Those assumption are valid, of course, as long as the overall US and global stock markets do not crash, which could temporarily lead to a 30-40% fall in Alphabet's market capitalization. Otherwise, so far there is not any credible competitor to google on the horizon.
Disclaimer:
The blogposts and comments on this blog and posts on social
networks(Twitter, LinkedIn etc.) are not investment recommendation,
are provided solely for informational purposes, and do not constitute an
offer or solicitation to buy or sell any securities. The opinions
expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!
Petar
Vladimirov Posledovich is not liable for any investment losses incurred
by reading and interpreting blogposts on this blog and posts on social
networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Kind regards,
Petar Posledovich
No comments:
Post a Comment