With continually growing ad revenue from platforms like YouTube and its dominant search engine, Google and parent company Alphabet Inc (NASDAQ:GOOGL) stand practically peerless in not just the tech world but in business in general.
So says Ashley Misquitta, senior portfolio manager at Empire Life Investments, who argues that more than just a good stock to own, a lot of Google’s success can be chalked up to its undeniable proclivity for innovation.
“What I really think is interesting about Google in addition to the strong cash flow, good balance sheet and all those things that we like, through Waymo they are one of the key leaders in self-driving vehicles,” Misquitta said on BNN yesterday. “So, today, that’s effectively a free option for you. If that works out in a really positive manner for them, then great, you get the benefit of that, as well. They also have in their ‘other bet’ section a number of different opportunities that they’re pursuing.”
Google’s self-driving technology unit, Waymo, has been racking up the deals as of late, announcing a partnership with Honda to put its autonomous tech in delivery-focused Honda vehicles as well as an agreement with Jaguar Land Rover to provide 20,000 of its new electric I-Pace cars in support of Waymo’s ride-hailing service, said to be aiming to compete with Uber in the upcoming self-driving ride-hailing service sector.
“Waymo started with a few people doing some testing,” says Misquitta. “They went to the CFO to ask for more money and showed them demonstrated proof of success and got more money to continue to expand, and look at where we are today. It’s conceivable that we could see more opportunities to evolve like that.”
Alphabet Inc.’s first quarter earnings are upcoming on April 23, with expectations of a 22.5 per cent uptick in the company’s revenues. Overall, estimates are that 2018 will see Alphabet’s revenue grow by 20.5 per cent to US$133.56 billion.
But privacy concerns involving Facebook have led to a downturn in the tech sector in general, with GOOGL having now lost 12 per cent off its late January high.
Misquitta says that Google along with Facebook are benefitting tremendously from the ongoing shift towards e-commerce.
“There are huge amounts of dollars being transferred from print and tv to online,” says Misquitta. “If you think about a tunnel with two characters at the end, just having all the money flowing their way, it’s kind of like how Google and Facebook have been. Google has huge ad inventories. They have the ability to place ads in a number of places. They’re able to place video ads in front of their Youtube videos — and the Youtube usage is growing — so, I think overall, they’re a terrific business and things are going to continue to go well.”