Alphabet's Financial Performance Remains Strong
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy GOOG?
Source: Fool
- Significant Revenue Growth: Alphabet's revenue surged from $75 billion in 2015 to over $400 billion by 2025, achieving a compound annual growth rate (CAGR) exceeding 18%, indicating the company's increasing competitiveness and attracting more investor interest.
- Operating Income Surge: Operating income rose from $19.4 billion to $129.2 billion, a staggering 566% increase with a CAGR close to 21%, which not only enhances the company's profitability but also strengthens its leadership position in the tech sector.
- Increased R&D Investment: Over the past decade, Alphabet has quintupled its R&D spending, yet its operating margin improved by six percentage points to 32%, demonstrating a successful balance between innovation and profitability.
- Improved Earnings Per Share: Earnings per share skyrocketed from $1.14 in 2015 to $10.81 in 2022, reflecting the company's success in capital allocation, particularly after massive share buybacks, which further enhanced shareholder returns.
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Analyst Views on GOOG
Wall Street analysts forecast GOOG stock price to rise
15 Analyst Rating
14 Buy
1 Hold
0 Sell
Strong Buy
Current: 303.560
Low
255.00
Averages
336.08
High
400.00
Current: 303.560
Low
255.00
Averages
336.08
High
400.00
About GOOG
Alphabet Inc. is a holding company. The Company's segments include Google Services, Google Cloud, and Other Bets. The Google Services segment includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. The Google Cloud segment includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Its Other Bets segment is engaged in the sale of healthcare-related services and Internet services. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Google Cloud Platform provides access to solutions such as artificial intelligence (AI) offerings, including its AI infrastructure, Vertex AI platform, and Gemini for Google Cloud; cybersecurity, and data and analytics. Google Workspace includes cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Operating Income Surge: Operating income rose from $19.4 billion to $129.2 billion, a staggering 566% increase with a CAGR close to 21%, which not only enhances the company's profitability but also strengthens its leadership position in the tech sector.
- Increased R&D Investment: Over the past decade, Alphabet has quintupled its R&D spending, yet its operating margin improved by six percentage points to 32%, demonstrating a successful balance between innovation and profitability.
- Improved Earnings Per Share: Earnings per share skyrocketed from $1.14 in 2015 to $10.81 in 2022, reflecting the company's success in capital allocation, particularly after massive share buybacks, which further enhanced shareholder returns.
See More
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- Market Challenge Response: Although the advertising market's weakness in 2022 led to a decline in net income, Alphabet ramped up R&D spending to capitalize on opportunities in fast-growing areas like cloud computing and AI, laying the groundwork for future growth.
- Historical Performance Comparison: Following a nearly 90% profit surge in 2021, Alphabet's net income fell in 2022; however, the bottom line still grew nearly 50% from 2020 to 2022, showcasing the company's resilience amid volatility.
- Investor Confidence Restoration: Despite concerns about business model disruption, Alphabet's financial performance starkly contrasts with investor narratives, rewarding long-term holders' patience and reflecting market confidence in its future growth through significant stock price increases.
See More
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- Strong Client Spending Plans: Major tech companies like Amazon, Meta, and Alphabet have announced capital expenditure plans for 2026 totaling $200 billion, $115 billion to $135 billion, and $175 billion to $185 billion respectively; while not all funds will go to Nvidia, these budgets signal ongoing investment in AI hardware, suggesting sustained business growth for Nvidia.
- Increased Competitive Pressure: As customers reduce reliance on single suppliers, companies like Amazon are accelerating their internal chip development, with projected annual revenue from custom chips exceeding $10 billion, which could erode Nvidia's pricing power and impact future profit margins.
- Long-term Growth Expectations: Although Nvidia's business continues to grow, increasing competition and customer cost pressures may lead to annual returns of 10% to 12% over the next five years, with stock prices projected to reach between $303 and $331, reflecting a cautious optimism about its future performance.
See More
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- Major Corporate Investment Plans: Tech giants like Amazon, Meta, and Alphabet plan to invest approximately $200 billion, $115 billion to $135 billion, and $175 billion to $185 billion in capital expenditures in 2026, indicating sustained demand for data centers that will bolster Nvidia's growth.
- Increased Competitive Pressure: While Nvidia's business continues to grow, customers are reducing reliance on single suppliers, with Amazon's custom chip initiatives generating over $10 billion in annual revenue at a triple-digit growth rate, potentially eroding Nvidia's pricing power.
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