Google parent company Alphabet (NASDAQ:GOOGL) may not be doing as well in 2018 as some of its FAANG buddies when it comes to share price, but the company’s will to diversify, matched with its consistently growing top and bottom lines, make it hard to beat, says Cameron Hurst of Equium Capital Management.
2018 has been an up and down year on the stock market, no doubt, but some tech giants of the FAANG group are clear winners so far. Year to date, Alibaba is up 16 per cent, Amazon is up almost 44 per cent, and Netflix an incredible 83.7 per cent. At the other end, even with all of its troubles over privacy and regulatory, Facebook has still gained 6.5 per cent on the year, while Alphabet is just a bit better, up 7.9 per cent.
And even though Alphabet remains primarily an ad generating enterprise, it has been investing heavily in other tech areas, some of which could be coming to fruition pretty soon. And it’s those efforts to diversify that Hurst is keeping an eye on.
“Essentially, it’s an ad company,” says Hurst CEO and chief investment officer at Equium, to BNN Bloomberg. “But ultimately, they have their other bets category: investing in AI, machine learning, cloud. And they’re a leader, so they’re doing exceptionally well.”
Alphabet’s Waymo self-driving car subsidiary is said to be an industry leader in the technology, with the company logging over eight million kilometres on public roads to date. The company says it will launch a self-driving taxi service in Phoenix, Arizona, sometime this year.
Google’s cloud business and hardware sales are also improving, bringing in revenue of almost $4.3 billion during the first quarter of 2018, which compared to US$3.2 billion last year. (All figures in US dollars unless otherwise noted.)
In April, the company’s Q1 2018 financials beat expectations, producing revenue of $31.15 billion versus the $30.29 billion consensus, while its earnings per share was $9.93 versus the consensus $9.28.
“They’ve put up now 32 or 33 quarters now of multiple double digit growth — over 20 per cent growth,” says Hurst. “I mean, think of the size of this enterprise, and to be doing that for so long is a phenomenal feat. And yet, they have a growing share, a growing pie still to benefit from.”