Alphabet Stock is above $100

Alphabet Inc. (GOOGL; GOOG) is a holding company comprised of a group of businesses, the largest of which is Google. Google focuses on online advertising, search engine technology, Chrome Internet browser, Android, Gmail, YouTube streaming video, and other services. The company also provides cloud computing services through Google Cloud, which allows developers to build, test, and deploy applications.

Over the past year, Alphabet stock has lost 25% of its value. Recently though, Alphabet stock has been moving up. Read on to learn how Alphabet has established a strong position in the market and the company’s prospects.

About Alphabet Inc

Alphabet was founded (under the name Google Inc.) as a search engine company in 1998. It went public in 2004. In 2015, the company reorganised and created the holding company, Alphabet Inc.

Since 1998, Google has become the world’s most popular search engine with an 84.69% share of the search market. Competitors include Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), and Apple Inc. (AAPL).

In 2021, Alphabet’s net income was $76 billion, up from $40.3 billion in 2020. In April 2022, Alphabet announced it would invest approximately $9.5 billion in their U.S. offices and data centers in 2022.

Alphabet stock has been increasing

Over the past year, shares in Google parent Alphabet have lost 25% of their value. Recently though, Alphabet stock has been moving up. From its widespread Google search to mail services, cloud computing to YouTube, Alphabet has established an enviable position that competitors have struggled to beat. A risk currently facing Alphabet is an advertising slowdown hurting profitability. This was evident in the company’s performance last year when annual revenue growth had slowed to just 1% by Q4, while full-year profits were 21% lower. However, even after that huge fall, net income was still a huge $60bn. Alphabet’s current market cap is $1.32 trillion.

Alphabet stock is up 104%

The stock of Alphabet Inc. is up 104% in five years and the share price has increased by 18% over the last quarter.

Markets may be a strong pricing mechanism, but share prices reflect investor sentiment as well as underlying business performance. By comparing earnings per share (EPS) and share price changes over time, this can indicate how investor attitudes to a company have changed over time.

Over 5 years, Alphabet managed to grow its earnings per share at 39% per year. The EPS growth is more notable than the yearly share price gain of 15% over the same period.

Alphabet (GOOGL) boosts reach in Europe

Alphabet’s GOOGLdivision Google will set up a cloud region in Turin. Cloud regions are physical locations where a company clusters data centers and enables customers to access data faster. This will be the second cloud region that is due to open in Italy. The company’s first cloud region in Italy is in Milan.

Benefits include low latency, connectivity and data sovereignty functionalities. The aim of Google Cloud is to offer seamless access to its services to customers in Italy on the back of the new region.

Alphabet’s recent investment is expected to expand the company’s reach to Italian cloud customers. This will boost Google Cloud’s adoption rate.

The American multinational company expects to develop a market for technology partners, which will be valued at €1.904 billion within 2023-2025.

Expanding cloud region network

With the Turin region, Google is expanding its presence in the Europe cloud market. It will soon have 11 cloud regions, each with three zones, in this market.

Aside from Europe, Google’s increasing interest in the Asia-Pacific (APAC) region also remains important.

Recently, the company added a region in Tel Aviv, Israel. Alphabet also opened cloud regions in New Delhi, India and Melbourne, Australia last year.

Globally, the number of Google Cloud regions in total is 36.
Google Cloud has plans to further expand its cloud region network in Doha, Berlin, Dammam and Queretaro.

It will also open other new cloud regions, in Malaysia, Thailand, New Zealand, Greece, Norway, South Africa, Austria and Sweden.

All these ventures will contribute to the performance of Google Cloud in the short term, as well as in the long run.

In Q4 2022, Google Cloud revenues grew 32% year over year to $7.3 billion. This made up 9.6% of the quarter’s total revenues.

Competitive scenario

Due to the increasing number of global regions, Google is well-prepared to capitalise on the prospects of the global cloud market.

According to a report by Grand View Research, the global cloud computing market is expected to reach a CAGR of 14.1% from 2023 to 2030.

Google’s increasing prospects in the booming cloud computing market are expected to support Alphabet in gaining the confidence of investors in the future.

Moreover, Google’s planned efforts are expected to support its competitive position against other major cloud players, such as Amazon AMZN and Microsoft MSFT.

Future Prospects for Alphabet

So, what lies ahead for Alphabet? There are a number of factors in the company’s favour, such as its massive customer base, technological advantage, existing technical infrastructure and strong brands. Demand for the digital services it provides is great. The tech giant has an established customer base that it has developed through innovative AI tools that enhance its search capabilities and free products that increase switching costs like Google Chrome, Android, and Google Maps.

Prospects look hopeful, but Alphabet stock is 25% lower than where it was a year ago, even after the recent upwards trend. Some investors are concerned about what AI means for the core Google search market which is a crucial profit driver for Alphabet.

There’s also a bigger risk behind that. Alphabet competes in a fast-paced technological environment against a range of successful rivals. Investors in Alphabet should be concerned about revenues and profitability falling due to the rise of popular applications like TikTok and Instagram which have supplemented search engines for Gen Z users. This may be a risk but also an opportunity.

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