Overview
Alphabet is a holding company. Internet media giant Google is a wholly owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google’s other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue.
Bulls Say
As the number of online users and usage increase, so will digital ad spending, of which Google will remain one of the main beneficiaries.
Android’s dominant global market share of smartphones leaves Google well positioned to continue generating top-line growth as search traffic shifts from desktop to mobile.
The significant cash generated from the Google search business allows Alphabet to remain focused on innovation and the long-term growth opportunities that new areas present.
Bears Say
There is little revenue diversification within Alphabet, as it remains heavily dependent on Google and the state of the search ad space.
Alphabet is allocating too much capital toward high-risk bets, which face a very low probability of generating returns.
Google’s dominant position in online search is not maintainable, as more companies and regulatory agencies are contesting the methods through which the company has been extending its leadership.
Technical Analysis
GOOGL’s technical picture is BULLISH.
Robert's Recommendation
I first bought shares of Alphabet (GOOGL) in January 2018.