Bear markets can be scary, especially the one investors are grappling with now. The Nasdaq 100 technology index lost 33% of its value in 2022, well beyond the 20% threshold that defines bear territory, making it the worst drop since the onset of the COVID-19 pandemic in 2020. 

The tricky part about navigating this bear market is the long list of triggers. From high inflation to rising interest rates to geopolitical tensions across Europe, it's challenging to know when exactly the pessimism will abate. But those issues will eventually resolve, so for long-term investors, this could be an opportunity to buy high-quality stocks, and there are several of them available at a discount.

Google parent company Alphabet (GOOGL -1.93%) (GOOG -1.96%) is one of the best, and thanks to its recent 20-for-1 stock split, investors can pick up a share for less than $100. 

Keep both eyes on YouTube

Alphabet's operational diversity is arguably its greatest strength. The company has a market valuation of almost $1.3 trillion as of this writing, and while Google remains the key driver of revenue, Alphabet's investments in other platforms have borne significant fruit. 

In 2006, when the company was still called Google, it purchased online video platform YouTube for $1.65 billion. Fast-forward to today, and it has become one of the best bets in tech sector history. YouTube generated $30 billion in revenue during the last four quarters, and it might just be getting warmed up thanks to a new round of innovation.

Two years ago, the platform launched Shorts, its own short-form video incarnation designed to compete with ByteDance's ultra-popular TikTok mobile app. According to a recent report, ByteDance generated $61.7 billion in revenue during 2021 (mostly attributable to TikTok), and that could grow to $95 billion this year, so it's monetizing at a much higher level than YouTube. ByteDance did post a loss of $7 billion in 2021, though, reflecting its aggressive investments in growth.

But here's the good news for YouTube: Shorts has already amassed 1.5 billion monthly active users, placing it on par with TikTok by that metric. This is a positive given other competitors struggle to replicate TikTok's success (think Meta Platforms' Instagram, for example).

Creators and consumers of short-form video content tend to skew young, which is a coveted demographic for advertisers. This could be a significant opportunity for Alphabet, especially if YouTube can replicate the financial success of TikTok in the future. 

Google remains the top Alphabet brand

When it comes to search engines, none come close to the dominance of Google Search. It currently holds a 92% global market share, and not even disruption attempts by other trillion-dollar companies like Microsoft have made a dent (Bing holds just a 3% share).

Data is everything when it comes to search, so Google's long-term presence in the market gives it a discernible advantage over competitors. It has been feeding its machine-learning algorithms far longer, allowing much faster and more accurate search results. This draws in more users, which creates even more data, thus spinning a flywheel that cements Google's position as the industry leader.

Advertising is the main driver of revenue for Google Search, and it accounted for 58% of Alphabet's total revenue in the second quarter of 2022 (ended June 30). 

But Google Cloud also deserves a mention because, while just it accounts for just 9% of Alphabet's total sales, it grew by 35% in the quarter, outpacing all other segments. The cloud is going to be increasingly important in the long run as more businesses migrate their operations online, creating what could be a $1.5 trillion opportunity by 2030, according to Grand View Research.


Chart showing Alphabet's actual and estimated annual revenue from 2017 to 2023.

The long-term trends are in Alphabet's favor

There's no doubt more advertising will continue to shift to digital in the future, as it has over the last couple of decades. Alphabet's reign of dominance may continue on that basis, and potentially grow even more formidable. Right now, 60% of businesses use video marketing as a tool, with 74% of them seeing a better return on investment compared to image-based advertising.

Think about the success of YouTube in that context, and where Shorts may fit in over the next few years as advertisers clamor to reach younger audiences. 

Similarly, new trends like visual search are emerging, where users can upload photos to generate a search result. Google Lens can help shoppers find products online, for example, based on a simple image of a similar item, or even a barcode.

Staying ahead of new innovations in advertising could ensure Alphabet continues to grow its monster annual revenue figures (illustrated in the chart above), and its track record suggests it will do so. That's why investors should pick up Alphabet stock right now, especially since it's trading 35% below its all-time high amid the broader tech bear market.