Over the past decade, shares of Alphabet (GOOGL -0.16%) (GOOG -0.04%) have soared 448%. This stellar performance crushes the returns of both the S&P 500 and Nasdaq Composite Index by huge margins and owning shares would've made any investor extremely happy. 

But Alphabet is such a massive and successful enterprise -- now with a market capitalization of $1.6 trillion -- it can seem overwhelming to figure out key information about the overall business. After all, it's critical to have a solid understanding before even thinking about making an investment decision. 

With that being said, here are three things the smartest investors know about Alphabet. 

The leader in digital advertising 

In 2022, 79% of Alphabet's $283 billion of revenue was derived from digital advertising. This is clearly the most important aspect of the business.

According to Statista, Alphabet had the leading market share in the digital ad industry, ahead of Meta Platforms and Amazon. The industry is expected to grow to over $1.4 trillion by 2030, so there appears to still be a long runway for the business to expand. 

Digging a bit deeper, there's a single service that has essentially made Alphabet one of the most dominant corporations in the world. I'm talking about Google Search, which has 93.1% market share globally, according to data from Statcounter.

Even with ChatGPT breathing some optimism into Microsoft's Bing search engine, Google Search has expanded its market share in recent months. It's so popular that Google has become a verb -- an obvious indicator of how much mindshare it has around the world. 

There are worries, though, about how the prevalence of artificial intelligence (AI) will impact the search industry. If consumers simply ask questions to large language models and receive a single conversational answer, the thinking is that there would be less of a need to have multiple links pop up. And this means a reduced ability to display ads.

This could create a serious structural headwind for Alphabet's moneymaker. While it's too early for shareholders to panic just yet, this is something to keep in mind in the years ahead. 

Growing the cloud business 

Generating $7.5 billion of revenue in the first three months of 2023, which represented 11% of the overall company, Google Cloud Platform (GCP) is a segment that investors need to know about. This is Alphabet's cloud service provider, offering things like computing, storage, and networking capabilities to businesses across the globe.

This segment has huge potential. Customers see the need to outsource many of their IT functions. This results in sizable cost savings and valuable flexibility to increase or decrease the number of services needed with short notice.  

GCP trails behind Amazon Web Services (AWS) and Microsoft Azure in the cloud computing market. But it's encouraging that GCP's sales in Q1 were up 28% year over year.

That was faster growth than AWS in its most recent quarter. With the entire industry projected to be worth close to $1.6 trillion by 2030, this segment looks poised to be a huge revenue driver for Alphabet. 

Don't forget about YouTube 

Alphabet purchased video entertainment leader YouTube for $1.7 billion in 2006. In hindsight, this could go down as one of the best acquisitions ever.

Based on first-quarter data, YouTube's annualized revenue totaled nearly $27 billion, which is almost on par with streaming pioneer Netflix. To be clear, this only counts ad revenue. YouTube also offers paid subscriptions for YouTube Premium and YouTube TV, for example, which add additional sales. 

It's estimated that YouTube has more than 800 million active users. And according to Nielsen, YouTube commanded the highest share of TV time in the U.S. among streaming service providers in April. This puts the business in an advantageous position as more and more households decide to cut the cord. 

YouTube is an incredibly successful asset that gives Alphabet another popular gateway to amass even more data on users that can be a benefit to the entire company. If regulatory authorities crack down and force a spinoff, it's not difficult to imagine that YouTube could be worth more than Netflix.