The company's services attract billions of users and continue to drive revenue and stock prices higher.
there is no room for denial alphabet's (GOOG -1.10%) (Google -1.23%) Holds a powerful position in the technology industry. The company's market capitalization is his $1.9 trillion, making it his fourth most valuable company in the world, which is behind his platforms such as YouTube, Android, Chrome, and many services under the Google umbrella. It shows the power of the brand. This stock has proven time and time again to be worth owning for the long term.
Data by YCharts.
The company's stock price has soared 489% over the past decade. This means his $10,000 cash investment in 2014 is now worth almost $59,000, significantly outpacing the stock price. S&P500 and Nasdaq Composite.
But is it still worth investing in Alphabet, or is it too late? Let's take a closer look at the business to determine if the stock is still a buy.
A long list of powerful names has made Alphabet an advertising powerhouse.
Alphabet launched the search engine Google in 1998 to great success, becoming the gateway to the Internet for billions of users. And the company managed to maintain its dominance in the market, gaining his 82% share across search engines.
Google's success has allowed Alphabet to expand into other markets, including smartphone operating systems, online video sharing, cloud computing, productivity software, and more. But the company's smartest move is to leverage the massive user base it has built with these services to become a digital advertising powerhouse.
The company currently has nine platforms, each with more than 1 billion users, and nearly endless opportunities to sell ads.
The digital advertising market is expected to reach more than $740 billion this year, and spending is expected to rise to $871 billion by 2027, according to data from Statista. Also, Alphabet holds a major market share of his 26% in this area and is therefore willing to continue serving this area. The advertising market and its growth benefits.
Benefit from AI tailwinds
Since 2019, annual revenue has increased by 90% and operating profit has increased by 135%. Free cash flow increased 151% to $69 billion during that time. The chart below compares that last number to that of some of its biggest rivals.
Data by YCharts.
This impressive growth is largely due to the success of Alphabet's digital advertising business. It could also suggest that the company is better equipped than its competitors to continue to expand and invest in emerging technologies such as artificial intelligence (AI).
The AI market reached a valuation of nearly $200 billion last year and is on track to reach nearly $2 trillion by 2030, according to Grand View Research. So Alphabet's focus on monetizing this technology is a positive sign.
Earlier this year, the company launched its most advanced AI model, Gemini. And it reportedly plans to combine its research team with DeepMind to further strengthen its AI capabilities.
According to Reuters, Alphabet will move its responsible AI team focused on secure AI development from Research to DeepMind, bringing it closer to building and scaling AI models.
The technology has multiple practical applications that could boost revenues in the coming years. For example, improving AI capabilities could further secure the company's dominance in the search engine market by creating a Google search experience similar to OpenAI's ChatGPT.
AI can also power Google Cloud, make its ads more effective for marketers, and improve the user experience on YouTube with better video recommendations. If successful, Alphabet could use AI to improve its overall business and boost its stock price over the long term.
Data by YCharts. PE = price to profit.
This chart suggests that Alphabet stock is one of the best investments by value when compared to the big three tech companies. The company's expected price-earnings ratio and price-to-free cash flow are the lowest, indicating that the company's stock price is relatively cheap.
The stock has soared over the past decade, but the company's strong position in the technology industry and the emergence of AI suggest it's not over yet. Alphabet is on a buying spree right now.
Suzanne Frey, an Alphabet executive, is a member of the Motley Fool's board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Dani Cook has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
