1 Simple Reason the Google Stock Rally Will Continue

Each week, I endeavor to report the results of the Big Idea Portfolio, a collection of five tech stocks that I believe will crush the market over a three-year period. I've done it before; my last tussle with Mr. Market ended with my beating the index's average return by 13.35%.

Real money was on the line then as it is now, which means any one of the five stocks you see below could tip the scales in my favor. This time, Google (NASDAQ: GOOGL  ) stock rose 3.3% during the week of its annual I/O developer conference in San Francisco.

Skeptics will note that the search king didn't announce much at I/O, and they're right. CEO Larry Page instead spent time describing how "sad" he was to see Microsoft embrace Google Talk in Outlook.com without opening up its own services for Google to connect to.

So why remain bullish? Star Trek.

At I/O, Google announced progress in making its signature search engine more intelligent and interactive on every device we use. Spoken questions will get spoken answers. Think less Siri, and more ship's computer from Star Trek.

"Soon, you'll be able to just say, hands-free, 'OK, Google, will it be sunny in Santa Cruz this weekend?' and get a spoken answer," wrote Google senior vice president Amit Singhal in a blog post. "Then, you'll be able to continue the conversation and just follow up with 'How far is it from here?' if you care about the drive, or 'How about Monterey?' if you want to check weather somewhere else, and get Google to tell you the answer," 

The point? Google is as focused as ever on organizing, presenting, and profiting from the world's data. Investors should love that.

What's the Big Idea this week?
The Google stock rally, combined with bigger gains from salesforce.com (NYSE: CRM  ) , came just shy of erasing losses elsewhere. As a result, the Big Idea Portfolio forfeited 82 basis points in our three-year contest to see who can do better for investors.

Once again, all four indexes gained. The small-cap Russell 2000 led the way with another 2.17% jump, followed by the S&P 500's 2.07% gain, the Nasdaq's 1.82% bump, and the Dow's 1.56% improvement, according to data supplied by The Wall Street Journal. Here's a closer look at where I stood through Friday's close:

Company
Starting Price*
Recent Price
Total Return

Apple

$413.52**

$433.26

4.8%

Google

$650.09

$909.18

39.9%

Rackspace Hosting

$41.65

$39.68

(4.7%)

Riverbed Technology

$25.95

$16.24

(37.4%)

Salesforce

$25.26**

$46.79

85.2%

AVERAGE RETURN

--

--

17.56%

S&P 500 SPDR

$124.39**

$166.94

34.21%

DIFFERENCE

--

--

(16.65%)

Source: Yahoo! Finance.
* Tracking began at market close on Jan. 6, 2012.
** Adjusted for dividends, splits, and other returns of capital.

Notable newsmakers
Among the other tech stocks making news last week:

  • BlackBerry (NASDAQ: BBRY  ) announced plans to make the company's signature Messenger software available as a free iOS and Android app. The company also unveiled the Q5, a cheaper version of the high-end Q10 smartphone.

  • Cisco Systems (NASDAQ: CSCO  ) saw its stock pop 12% after reporting better than expected fiscal third quarter earnings. Gross margin expanded 110 basis points as adjusted earnings per share came in $0.02 ahead of estimates.

  • Solar City (NASDAQ: SCTY  ) saw its shares soar more than 50% after Goldman Sachs committed to a $500 million financing plan that would allow the company to install on the 110 megawatts of new projects in metropolitan areas.

  • Finally, mark your calendars: Salesforce reports results on Thursday, May 23.

What else caught your eye in the tech world last week? Would you buy, sell, or short Google stock now? Let us know what you think in the comments box below.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


Read/Post Comments (8) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 20, 2013, at 12:33 AM, k1moops wrote:

    Google is the closest rival to Apple's Siri in what is arguably the single hottest arena since the dawn of computing - Intelligent Machine. As Google is as focused as ever on organizing, presenting, and profiting from the world's data, Apple is as focused as ever on making machines that are as intelligent as a human being, capable of more than just making use of data of the world, but to actually listen, learn, reason, rationalize, and respond creatively and intelligently in very human ways.

    You can compare Google as a librarian, to Apple as a university professor. The difference is hugely significant. Google is not intelligent, Apple is intelligent.

  • Report this Comment On May 20, 2013, at 12:57 AM, k1moops wrote:

    While the rest of the world is struggling on with the speed of the hardware, Apple has already been working on the speed of the human thought. Siri works at the speed of the human thoughts, how can others compete? Currently projects like the Apache Hadoop, IBM Watson, SAP Hana are investigating opportunities in what is called Big Data, an understanding derived on massive amounts of low level data. But the science of human thoughts are still in its very infancy, perhaps it would never be understood what human intelligence is, but through the study of linguistic syntax and semantics, context, and referencing, Apple Siri has come to the forefront of understanding human thoughts at the natural language processing level, which is the current level of understanding between us humans. Siri applications will be utterly different than any apps we have ever had that are using arbitrary visual pages, windows, views, fields that have nothing to do with intelligence, rather, Siri applications will 'think' and 'behave' in very human ways that relate to humans as equals in every way.

    I anticipate the very pioneering generation of just such Siri applications to appear in the horizon soon. Apple's next product releases this fall with iOS 7 had been described as changes mostly on simplifying its human interface, that has the smacks of iOS 7 evolving into a highly intelligent OS relating with humans on a much more human way, rather than just another dumb OS with a pretty user interface. Apple is going to disrupt the computing world once again, this time with intelligence, true intelligence.

  • Report this Comment On May 20, 2013, at 1:02 AM, HelpIsHere wrote:

    Apple looks like it is ready for another 52 week low again in June. No products, boring OS, wrong screen size, spending $ 60 billion on a very poor investment, what's to like about this dog? In this environment, the smaller plays will rock the sector.

  • Report this Comment On May 20, 2013, at 1:13 AM, HelpIsHere wrote:

    Siri might just be the reason that historians will want to refer to, when they describe the collapse in Apple. Most consumers ask some lame questions, laugh at the response, and write to Apple complaining about all of the problems they have with the latest OS, Apple Maps, poor hardware build, the list goes on. Siri was a laughable diversion and no one has it turned on today. But Siri will never be forgiven or forgotten as the software that prevented Apple from being a success. When we think of all the money and brain power that could have been directed toward something far more useful, its a crime.

  • Report this Comment On May 20, 2013, at 3:15 AM, k1moops wrote:

    First Siri, now Google search is going voice too. Others are all following suit. Keyboards will go the way of cassette tapes.

  • Report this Comment On May 20, 2013, at 3:18 AM, k1moops wrote:

    Windows has nice voice apps too. Blackberry is the only one with no intelligent assistant for voice apps. When voice apps go mainstream, Blackberry is dead.

  • Report this Comment On May 20, 2013, at 3:26 AM, sazabi1980 wrote:

    Do you owe Apple money? Like holy $hit buddy, give it a rest.

  • Report this Comment On May 20, 2013, at 3:29 AM, NOTvuffett wrote:

    One day, a salesman that works for my company brought a phone with Siri on it. The guys stood around asking stupid questions and laughing at the lame ass replies. I couldn't help but think that this is inappropriate behavior for the workplace. Then I thought that I would fix their little red wagon and I had them search for 'gay midget porn'. Siri pulled up video on that and they dutifully laughed. Instead of getting my point, I had to console myself that I had made them look at gay midget porn.

    Really, I just don't get AAPL. Their numbers are good, but their market penetration on PC's is inconsequential. Their share of the smart phone market is now dwarfed by those running the GOOG OS. Tablet computers seem to be of little use aside from consuming media.

    Gold is down so some on this site have proclaimed the gold trade dead. AAPL is down as much and yet some here proclaim it it to be the best thing since sliced bread.

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