- Google continues to set the pace for other tech companies to follow.
- Youtube Red provides an exciting opportunity for the company and its investors.
- Google's R&D developments indicate a highly bright outlook for the future of the stock.
If companies had an American dream, it would look a bit like Alphabet Inc-C (NASDAQ:GOOG). After being founded in 1996, Google has grown to one of the world's largest company, and one of the few businesses with a market cap of more than half a trillion dollars. Getting to this point hasn't been without some trials and tribulations. They had to outcompete internet heavyweights such as Yahoo (NASDAQ:YHOO). In fact, if Google+ had gained traction in the social media space, they could have greatly extended their lead and posed a threat to Facebook (NASDAQ:FB). There's an attempt to relaunch Google+, but only time will tell how that pans out.
This year Google has been taking some giant leaps forward in order to strengthen their position. This is exemplified by some key investments and an earnings growth of 34.82%. As a result, this has been reflected in the stock price which shot up by 35.5% over the past year. However, Google is set to increase earnings and diversify its interests in 2016. As a result investors can expect significant returns from investing in Google stock.
Below are 5 main reasons why Google is a lava-hot-buy for 2016.
With a market share of the mobile phone market that currently stands at 53.54%, Android has gained 6% from the beginning of the year to date. On the other hand, iOS has a market share of 38.53%. This can be attributed to the fact that the Android experience is on-par with what one could get on iOS. Additionally, Android devices tend to be much cheaper than their iOS counterparts.
Google benefits from Android by baking in more of their own apps and experiences, plus making revenue from each app sale. Due to the fact that manufacturers continue to produce high quality smartphones at low cost, expect Android to play a more pivotal role in the fortunes of Google going forward.
Additionally, as more devices are being introduced into the market, i.e. wearables, and virtual reality, this will provide more opportunities for the world's most popular mobile operating system to expand its reach.
Content is moving to an a-la-carte streaming model. So far Netflix and Spotify have been able to come out on top. With Youtube Red, Google is offering a highly compelling service. For $9.99, one can have access to an ad-free Youtube experience, 30 million tracks, and exclusive content. Due to the fact that Google has the world's leading advertising network and the most visited video sharing site, the user acquisition rate for this service is likely to be very high.
Netflix has 69 million subscribers and Spotify has 60 million users. Google will be hoping to take a substantial percentage of users into their new service. And due to their brand image and marketing prowess, it could be a game-changer.
This is a smart move by Google, and one that should arguably have come sooner. For now, Youtube Red is only available in America, but there are plans to roll it out globally over the course of 2016.
Google's acquisition of Boston Dynamics allowed it to gear themselves up to enter a next generation defense industry. Boston Dynamics' robots are highly intuitive in the sense that some can walk on all terrains and can regain their balance very quickly.
In fact, in September one of their robots were tested by the Marines. It is worth noting that Boston Dynamics have always enjoyed a great partnership with the American army thereby opening the door for highly lucrative long term contracts in the future.
Boston Dynamics is the most high-profile acquisition, instantly adding world-leading robotics capability, including robots that can walk all on their own, to Google’s arsenal – as well as significant links to the US military – conjuring images of Skynet and the artificial intelligence-led robot uprising straight out of the 1984 film The Terminator.
Stability Of Google As A Company
Google's founders have been able to grow from a research project in a garage to a global empire with more than half a trillion dollars as market cap. The company continues to innovate and find new ways to disrupt the market place. For instance they had the foresight to purchase YouTube in 2006, and grow it into the most influential video sharing site on the planet.
Moreover, products such as Google docs, Gmail, and Android have allowed Google to acquire more users in order to provide advertisers with a good return on investment. In fact, advertising made up 90% of Google's total revenue by the end of 2014.
As the company grows, they continue to maintain a positive brand image.
Despite their success, the company is hungry for more and continues to diversify into robotics, automotive, and into cloud offerings.
In order to emphasize the stability of this gargantuan company, it's worth taking a look at their financials.
Over the course of this year Google's earnings have shot up by 34.82%. And with Youtube Red being rolled up next year, improvements to Google's ad platform, and the continued growth of Google's cloud platform, you can expect revenue growth to surge strongly in 2016. It is also worth considering that Google's net income growth outperformed the S&P 500 and is set to grow for the reasons mentioned above.
Self driving cars
Generally speaking most of the world's industries are gearing towards automation in order to drastically increase efficiency. Self driving cars have moved from being a fantasy to an impending reality. And Google has conducted a lot of R&D to ensure that they are well-placed to fully capitalize on the opportunity.
In fact, Uber's CEO mentioned that he wants to ensure that Uber has a self-driving fleet of cars in the future. This could trigger a lot of demand for Google's self driving cars. At this moment in time, Google looks like the closest to making a market-ready product.
However, developing self-driving hardware and software stretches way past the realms of personal transportation. Practically every major industry has a need for the transportation of goods. Therefore, the revenue can be generated by licensing the technology to automotive manufacturers are likely to be significant.
In conclusion, Google continues to innovate, and develop products which meet the needs of consumers. Additionally, their robotics and self-driving cars R&D places them in a good position to gain considerable revenue and diversify their interests.