Tech stocks have been hit hard in 2022, with the biggest companies in the world losing investors' trust as inflation continues to rise and consumer spending declines. Alphabet (GOOG -1.91%) (GOOGL -1.80%) has been affected, with its share price falling 34% year to date. 

As Google's parent company, Alphabet has permeated the tech industry in a way few other businesses have been able to. It has used its brands to grow its market share in the lucrative advertising industry and has also seen positive cloud-market growth, offering prospective investors a green flag. However, Alphabet has gained a reputation for prematurely shutting down services, making consumers unwilling to adopt its new products.

When you dive deep into companies' business practices, most of them have green and red flags, and Alphabet is no different. The question is, does the good outweigh the bad?

Green flag: Its market strength

Alphabet is home to behemoth brands such as Android, Chrome, YouTube, Google, and all of its services associated with the search engine. The company has used the potency and popularity of these businesses to attract advertisers from around the world, retaining a leading position in digital advertising since at least 2016, with a 28% share in 2022.

Although advertising competitors such as Meta Platform's Facebook and Amazon are on the prowl, analysts expect Alphabet to retain its leading market share until at least 2023. 

Moreover, the 2.6 billion monthly YouTube users and the platform's growing ad revenue have proved video is an increasingly effective way of reaching consumers. From 2020 to 2021, the video platform's ad revenue increased 25%, and it continued rising in 2022. It was up 9.2% in the first two quarters of 2022 compared to the year before.

Investors have grown weary of Alphabet's business because global ad spending fell 3.3% in August, declining for the third consecutive month. The fall in demand is concerning since 92.8% of the company's revenue came from ads in the second quarter of 2022 when combining Google and YouTube's advertising earnings. Rising costs have led businesses to rein in their advertising budgets; however, it's not all bad news. U.S. digital ad spending is expected to rise 31% from $239.89 billion in 2022 to $315.52 billion in 2025, according to Insider Intelligence.

Additionally, an increasing amount of services, such as video streaming platforms, are using ads to supplement a reduced subscription fee. If a recession does hit, more businesses might do the same as they strive to offer competitive pricing and look to Alphabet's Google Network to serve ads on their platforms.

Red flag: Its growing product graveyard

As one of the most innovative companies in the world, Alphabet has launched hundreds of services and products, and not all have been as successful as Google. As a result, the company has a growing graveyard of products that it launched and then shut down after they proved unsuccessful.

For years, tech enthusiasts have poked fun at Alphabet's tendency to launch a new service and shut it down within a few years. In fact, there's a whole website dedicated to the growing roster of products the company has killed, which lists 274 currently or soon-to-be defunct services. 

On Oct. 1, Google Stadia became its latest service to get the ax after launching in November 2019. The platform saw the company venture into games, with Stadia being a cloud-gaming service that users could pay a monthly subscription to access from anywhere and on nearly any device. 

Stadia's business model was flawed from the start. Alphabet marketed it as a way to play intensive games without expensive hardware such as Sony's PlayStation or Microsoft's Xbox. The idea sounds promising, but the platform never truly found its audience since not many gamers are unwilling to purchase a console or don't already have one. And while Alphabet's cloud-gaming technology was impressive, streaming games does not match the quality of playing a downloaded console or PC game. 

Along with a flawed approach to games, Stadia also suffered from Alphabet's reputation for shutting down its services. Many consumers were unwilling to adopt the gaming service and sink hundreds of dollars into building up a Stadia game library, with the risk that it might not be around in a few years. 

As a result, Google Stadia will be defunct come January 2023, joining other axed services such as Google Hangouts, Reader, YouTube Originals, and many more.

Is Alphabet stock a buy?

Although consumers are hesitant to embrace Alphabet's new products, they continue to show up in droves to its tried-and-true platforms such as YouTube, Chrome, and Gmail. Consequently, the company ended the second quarter with total assets of $355.2 billion versus $99.8 billion of liabilities. Free cash flow came in at $12.6 billion. 

Alphabet has strong financials, and its price-to-earnings ratio is at an all-time low, suggesting the company is in better standing than its stock price would have you believe. Earnings could dip in a recession, but its leading market share in digital advertising and the potency of its services prove Alphabet is still an excellent long-term buy.