It's hard to imagine that brands like Android, YouTube, Google, and even Fitbit fall under the same company. Each is a subsidiary of Alphabet (GOOGL 3.13%) (GOOG 3.39%), making the company one of the most successful organizations in history. Its stock price hit a new all-time high last week, crossing $190 per share. Meanwhile, recent developments suggest that Alphabet still has plenty of room to run over the next decade and beyond.
Alphabet has benefited from a rally across tech, which has seen its shares soar about 57% since last July. Wall Street has grown bullish about companies pushing the envelope in artificial intelligence (AI), with Alphabet one of the biggest names in the industry. The Google company has been an AI-first firm since 2016, innovating with its DeepMind AI research laboratory.
Additionally, Alphabet has a dominating position in digital advertising that is delivering significant financial growth.
Here's why it's not too late to buy Alphabet stock -- it's actually a screaming buy right now.
Leveraging its lead in advertising to elevate its position across tech
Alphabet has many products under its umbrella. These range from productivity software to a search engine, video sharing, a leading smartphone operating system, and much more. However, going purely by its earnings, the company is primarily a digital advertising firm. Alphabet has strategically used the massive popularity of its various platforms to become an advertising behemoth, responsible for a leading 24% of the market.
In fact, ads from its various services earned 87% of the company's revenue in the first quarter of 2024, up 14% from the previous year and totaling more than $70 billion. Despite many years in the industry, advertising remains a highly lucrative venture for Alphabet, as operating income from Google Service rose 28% year over year in Q1 2024.
Alphabet's dominant position in advertising and its long list of potent brands have given it the financial resources to expand its business. The company has ramped up its AI efforts over the last year, expanding its library of generative tools on Google Cloud and launching its most advanced AI model ever, Gemini.
Despite Alphabet's many years in the AI market, it's still early days for its journey into the space when considering its potential. The company has the opportunity to employ a similar strategy to what it did in advertising, using its popular services to promote its AI technology. In this way, Alphabet can bolster business by building Google into a true competitor to OpenAI's ChatGPT, continuing to expand Google Cloud, adding generative features to its productivity platforms, and offering more efficient advertising.
Delivering major financial gains
Alphabet has spent billions on AI over the last year, yet the company has continued to deliver significant financial gains. Recent growth illustrates the reliability of its business over the long term and its ability to keep up with its competitors in the coming years.
In Q1 2024, Alphabet's total revenue soared 15% year over year to $81 billion, beating analysts' forecasts by nearly $2 billion. However, the most impressive rise came in the form of operating income, which spiked 46% year over year to more than $25 billion. The increase came from considerable growth in Google Services profits. Meanwhile, Google Cloud delivered nearly five times the operating income from the previous year.
Data by YCharts.
The chart above shows that Alphabet delivered impressive financial growth over the last five years. The company is on a promising growth trajectory that makes its stock just too good to pass up right now.
Alphabet is one of the best bargains in tech
Alphabet's 57% stock rise over the last year outperforms many of its peers, including Amazon, Microsoft, and Apple. Yet, the chart below indicates that the Google company's stock still offers more value than any of these competitors.
Data by YCharts.
The data above compares the valuations of some of the most prominent tech companies using their price-to-earnings (P/E) ratios. P/E is a helpful metric calculated by dividing a company's current stock price by its earnings per share. In this case, Alphabet's significantly lower P/E makes it one of the best bargains in "Big Tech."
With its considerable financial growth and potential in AI, it's clearly not too late to invest in Alphabet and benefit from its development long into the future.
