Alphabet's Hidden Strengths Drive Stock Price Growth
Alphabet's (NASDAQ:GOOGL) stock price has been rising steadily, and one financial expert believes it's due to the company's impressive growth in various areas. Despite its market value, Alphabet is trading at a multiple that feels borrowed from another decade, but the numbers tell a different story.
The company's four monetization engines, Search, YouTube, Cloud, and an autonomous driving unit, are compounding revenue at a rapid pace. In Q2, revenue reached $119.8 billion, up 24.23% year over year, marking the 12th consecutive quarter of double-digit growth.
The expert highlights three reasons for their conviction in Alphabet's stock: Google Cloud is no longer a side story, with segment revenue accelerating to $24.77 billion and nearly 90% of Fortune 100 companies using Gemini Enterprise. Additionally, the ad flywheel is accelerating, with AI Mode driving higher overall query volume rather than cannibalizing ad inventory.
The company's valuation is also attractive, with a P/E ratio of 15 on a business with a 35.70% return on equity and an operating margin of 32.03%. The expert notes that Alphabet still trades at a lower multiple than its peers in the mega-cap tech sector.