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IT software and Services industries are suffering from a fall in demand for software and web services as consumers are focusing solely on essentials and not discretionary products. That said, the industry has seen companies with a portfolio of software as well as services aimed at remote collaboration benefit due to the growing number of people globally. Many companies are also operating with employees working remotely from their own home.
Alphabet announced its Q1 2021 results on Apr 27, 2021. The company reported revenues of $55 billion, up 34% y-o-y. Google Advertising segment's revenue saw growth at 32% y-o-y as it recorded revenue of $44.7 billion. Google Cloud saw a good revenue growth as it recorded revenue of $4 billion up, 47% y-o-y. Operating Margin rose to 30%, and Operating Income was recorded at $16 billion, up by 106% y-o-y. Earnings for the quarter were recorded at $26.29, up from $9.87 in the previous year.
Below are key drivers of Alphabet's value that present opportunities for upside or downside to the current Trefis price estimate for Alphabet:
For additional details, select a driver above or select a division from the interactive Trefis split for Google at the top of the page.
Google.com and Google's international sites (e.g., Google.ru, Google.com.br, and others) offer a dedicated platform to conduct searches on the Internet through PCs and wireless devices.
Google makes money from contextual advertising known as keyword advertising that is shown based on the type of search a user conducts. For example, a user searching for "NYC restaurants" would be shown a variety of ads on the right-hand side of Google's search results about restaurants and food services in New York City.
Advertisers on Google bid for keywords (such as "NYC restaurants ") to display their advertisements on the Google search page. Google AdWords allows these advertisers to display advertisements in Google's search results and the Google Content Network through either a cost-per-click or cost-per-view scheme. The pricing of keywords, the inventory of keywords available, and the frequency of user search impact how much money Google makes on search.
In addition to advertising on its search engine, Alphabet makes money by placing advertisements on other Google-owned properties such as video-sharing site YouTube, email service Google Mail (Gmail), etc. Alphabet also makes money by facilitating the placement of advertising on its "partner" websites (via ad serving platform AdSense) from which it receives a share of the advertising revenue.
Google search on mobile is increasingly gaining importance as more and more users are shifting towards mobile devices like smartphones and tablets for desktop-based web browsing. According to our estimates, derived from publicly available sources, tablets and smartphones surpassed PCs in use globally in 2014. As a result, mobile search is increasingly gaining importance for Google, rivaling its PC-based search in contributing towards Google's stock.
We believe Google Search Ads is much more valuable than Ad Partnerships for Search & Content, YouTube, Gmail, and other divisions of Alphabet due to the following reasons:
Alphabet's flagship search business, Google, continues to dominate globally. Competitors such as Microsoft have been consistently pushed back as Google retains market shares of around 63% and 95% in PC and mobile devices, respectively. The company's superior algorithms and brand recognition have found favor with users, and to date, the search engine market has not boasted of a better search tool. Given the current trends, Google's dominance is expected to continue, although one cannot discount future technologies such as Apple's Siri as possible future threats.
As web penetration increases across emerging markets like India, users are expected to increasingly become more familiar and comfortable with using web search as the flagship tool to look for information. In addition to this, web browser development has made it easier to do a web search promptly. For example, Google Chrome obviates the need to open the Google homepage to perform a search. These above factors should contribute significantly to growing web searches for every PC device globally.
The mobile revolution would have a significant role to play in the way Google search is utilized. Smartphone and tablet capabilities are improving by leaps and bounds. This includes personal usage like finding restaurants and utilizing maps and GPS (Global Positioning System), as well as professional uses such as sending/receiving emails and making presentations. As bandwidths increase in emerging markets, mobile device functionality is expected to come at par with PCs in the coming years. This should lead to a substantial increase in the number of mobile devices in use globally.
We expect increasing adoption of Internet search capable mobile phones, higher mobile Internet speeds, and increasing partnerships between search engines and mobile phone manufacturers (e.g. think Google search on iPhone). According to a report by Zion Research, global mobile ad spending is expected to grow to $245 billion by 2022, a CAGR 15% over 2016 numbers. Google's open-source mobile OS, the Android, should greatly benefit from this, as it uses Google search as the default search option. Android also has the advantage of being used by multiple manufacturers, including Samsung, LG HTC, and most of the Chinese vendors.
In contrast to search, which is more functional and commercial in nature, online video and social networking are more entertainment-focused, where ads are generally seen as a distraction. Currently, advertisements displayed on such platforms are graphical and static, which does not drive the same recall as a moving video (e.g., television ads). As YouTube and other video sharing sites figure out better ways of displaying ads that are not intrusive and do not interfere much with the user experience, advertisers will be willing to pay more for such ads, driving up overall video advertising monetization.
Alphabet (Google) (NASDAQ: GOOG) is scheduled to report its fiscal Q2 2021 results on Tuesday, July 27. We expect GOOG to beat the consensus estimates for revenues but miss for earnings. The company has reported better than expected revenues and earnings figures in each of the last four quarters. ...More
Nvidia (NASDAQ:NVDA) stock rallied by a whopping 35% since May 21st when the company announced its first stock split in nearly two decades. While a part of the rally was driven by a strong set of Q1 earnings and some positive developments related to the company's proposed acquisition of chip designer ARM, the stock split is likely the biggest driver of the company's rally. ...More
[Updated 06/24/2021] Google Update Alphabet's stock (NASDAQ:GOOG) has seen a rise of 45% since the end of 2020 but is now close to its near term potential. In comparison the S&P 500 rose by 13% since the end of 2020. ...More
Alphabet (Google) (NASDAQ: GOOG) is scheduled to report its fiscal Q1 2021 results on Tuesday, April 27. We expect GOOG to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenues and earnings figures in each of the last three quarters. ...More
[Updated 02/08/2021] Google Update Having grown 57% since the end of 2019, Alphabet's stock (NASDAQ:GOOG) still has moderate upside in the near term. ...More
As an investment idea, Google's parent company Alphabet's stock (NASDAQ:GOOG) has shown strong returns versus Microsoft's stock (NASDAQ:MSFT): Alphabet stock is up 40% compared to a rise of about... ...More
[Updated 10/26/2020] How The Google Antitrust Case Threatens Apple The U.S. Justice Department's antitrust lawsuit against Internet behemoth Google could have major repercussions for Apple. ...More
Google's parent company Alphabet (NASDAQ:GOOG) does much more than search. It has a fast-growing presence across the enterprise cloud, Google Drive storage, YouTube, Google suite applications: from Gmail to Chrome, and Docs, Sheets, and Slides. ...More
We think Google's parent Alphabet (NASDAQ:GOOG) should buy the global operations of TikTok and take another stab at a social media play. But this time, make it count. Google's Orkut - nobody remembers it - was so last decade, and Google Plus barely gained traction. ...More
After a 43% rise since the March 23 low of this year, at the current price of around $1,512 per share, we believe Alphabet's stock (NASDAQ:GOOG) has a slight upside left. Google's stock has increased from $1,057 to $1,512 off the recent bottom, better than the S&P which also increased by around 44%. ...More
Facebook's stock (NASDAQ:FB) is up by about 16% since early 2018 - well below the 28% gain for Google’s parent Alphabet’s stock (NASDAQ:GOOG) over the same period. Interestingly, though, Facebook’s Revenues have grown by 74% between 2017 and 2019, which is nearly 1. ...More
Trefis estimates that Alphabet (NASDAQ:GOOG) will lose no less than $10 billion in advertising revenues this year due to the coronavirus pandemic. The company's advertising segment includes three segments: Google Search and other, YouTube Ads and Google Network Members' Properties. Combined revenues for these three segments have risen from $95.6 billion in 2017 to $134. ...More
Apple's (NASDAQ:AAPL) stock is up by about 140% since early 2017. That's great for Apple. But hold on, Google’s parent Alphabet’s stock is up by just about 65% over the same period - meaning that Apple's stock is up more than 2x Google's stock. ...More
Alphabet (NASDAQ:GOOG), Google’s parent company, saw its stock price rise by almost 85% over the last three years, from $820 in February 2017 to about $1519 in February 2020. This rise was primarily driven by a significant increase in Total Revenue, and a slight decrease in shares outstanding. ...More
Alphabet (NASDAQ:GOOG), the parent company of Google, has increased its share repurchases, allocating over $18 billion to buying back its shares over 2019, up from $9 billion in 2018. However, the program has not reduced shares outstanding over the last few years, as buybacks have been more than offset by Google's sizable share-based compensation. ...More
In the following analysis, we take a look at why Tesla (NASDAQ:TSLA) could be an attractive acquisition target for Google (NASDAQ:GOOG). We break down our analysis into three parts: what Tesla would stand to gain, what Google would stand to gain, and a scenario where ... ...More
Alphabet (NASDAQ:GOOG) is slated to release its Q4 and full-year 2019 results on February 3, 2020. We believe that Alphabet's Revenues and earnings will beat consensus. We expect Alphabet to report revenues of $171 billion (vs. consensus estimate of $162.7 billion), which would be 25% higher than the previous year. Earnings are likely to be around $47.24 (vs. ...More
Trefis explores whether Google's P/E Ratio Makes Sense in a detailed interactive dashboard, and finds that the Internet giant’s current P/E Ratio might present an opportunity compared to the S&P 500. ...More
No, as per Trefis Price estimate Alphabet's (NASDAQ:GOOG) stock has a fair value of $1299, which is lower than its current Market price. Alphabet is a collection of businesses - the largest of which is Google. It also includes businesses far away from the company's main internet products in areas such as self-driving cars, life sciences, internet access, and TV services. ...More
As per Trefis estimation, Google Advertising Revenue, which consists of Google Properties segment and Google Network members' properties segment, will contribute 83.3% of Alphabet's (NASDAQ:GOOG) Total Revenue for 2019. Google properties business, is part of the company's advertising business and is expected to contribute $120 billion to Alphabet's 2019 revenues, making up 70. ...More