By Sean Lange From its internet influence via Google and its one-of- a-kind approach to leveraging Silicon
Valley start-ups, the holding company Alphabet (NASDAQ: GOOGL) should be viewed as a tech juggernaut. Its businesses at once encompass channels for immediate profit, products staked to growing industry demands, and projects based on visionary trends. Therefore, Alphabet offers a constant timeline of value, and is advised to be held as a long-term position under the condition that its price continues to advance... ...Google’s earnings per share are expected grow 10.92% to $30.89 in 2017, and then 31.59% to $40.65 in 2018. Yet, concurrent price estimates are projected to only increase from $970 by FYE 2017 to a high estimate of $1,050 by the conclusion of 2018. This renders a P/E ratio in the 18x - 22x range, a phenomenal figure for a company with as outstanding a growth horizon as Alphabet... ...In complement to its core search business, its Google division has two prominent vehicles for continuing dominance. YouTube revenues, at over $10 billion in 2016, represent 18% of Google’s total business. With an audience of over one billion viewers, and with new customization controls implemented that allow partners to choose exactly where in or where alongside videos their ads will appear, YouTube commissions are expected to jump 40% each year in both 2017 and 2018…According to Statista, Google’s Android operating platform is used in 76.2% of cellphones worldwide. Android software has a 90.46% share of the mobile software market in countries classified as emerging markets... ...With its 200th acquisition since Google’s 1998 inception coming this past July, Alphabet’s aggressiveness is the standard for prolific M&A within the tech industry. Despite wielding a $650 billion dollar market capitalization, Alphabet targets startups that reflect undervalued technologies rather than prized innovations, taking over unpolished assets and experimenting with them…many of these “Odd Bets” are managed under the premise that they may never produce a consumable product. While this deliberate swing-and- miss strategy would seem to make the company susceptible to wasted spending and the stock susceptible to lower EPS figures, this tactic may serve to insulate Alphabet from certain risks. If the economy or tech sector faces a downturn, Alphabet already has a buffer of operational costs written off and committed to extenuating failures... ...Alphabet is both an entrenched corporation and a tech growth company. The company is ubiquitous online (Google search and YouTube), in the information dimension (Google Cloud), in the industrial world (drones, drugs, computer hardware), in the material world (Google Glass, smart speakers), and in consumers’ hands (Android phones), for the immediate, intermediate, and long-term. When the business environment for one venture becomes unfavorable, there are still others that the company holds that can thrive. Per RBC analyst Mark Mahaney, “Alphabet is one of the strongest, most consistent fundamental stories in Tech. Period.”
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