Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) held its 10th annual developers’ conference last week. And while a lot of the talk at such a tech-heavy conference can be too jargon-y, too difficult to comprehend or too boring to the lay (read: non-developer) person, there was one meaty, easy-to-understand product that could potentially push GOOGL stock above $1,000 a share — perhaps as early as next week!
It’s called the Google Lens. It’s a technology that allows you to search for things with your smartphone camera.
Borrowing CEO Sundar Pichai’s examples in his conference keynote speech, with the Lens you can point your smartphone at a flower and it will automatically tell you what species it is, or at a restaurant and it will immediately spit back reviews, or at a person speaking a different language and it will translate for you. You can also play music, buy tickets or add events to your calendar through Google Lens. Pretty nifty!
Google Lens Is the Latest GOOGL Stock Catalyst
The Google Lens won’t be available in Google Photos until later this year, and will later be incorporated into Google Assistant. But the mere announcement of yet another innovative artificial intelligence product should engender enough good will on Wall Street to push GOOGL stock above $1,000.
Already trading at a record $995 a share (and climbing), it would take only a very small push to get Alphabet Inc to the rarefied four-digit mark. Considering the stock is up 4% in the last week, that doesn’t seem like much of a stretch — more of an inevitability.
But here’s the thing: big round numbers scare people, particularly investors. It’s why the Dow Jones Industrial Average took months to break through the 20,000-point barrier, and why so few stocks have made it to $1,000 over the years. Because of that, the jump to $1,000 may be a bigger obstacle than you’d think. Or at least it would be for a lesser stock.
Right now, however, GOOGL stock is the toast of Wall Street, up more than 17% in the last three months. Stellar first-quarter earnings helped. So has a bull market that has lifted all boats since the presidential election in November, though GOOGL has undoubtedly been one of the leaders of that rally of late.
But what’s really making GOOGL stock so appetizing to investors these days despite trading at its highest forward price-to-earnings ratio (24) in more than a year is its constant innovation. Along with Amazon.com, Inc. (NASDAQ:AMZN) (whose recent run-up has tellingly been almost identical to GOOGL’s), Google has assumed Apple Inc.’s (NASDAQ:AAPL) former mantle as Wall Street’s greatest and most exciting innovator.
GOOGL and the ‘Wow’ Factor
Less than a decade ago, the late Steve Jobs used to stand on a stage and unveil the newest iPhone, iPad or iPod and investors would gobble it up. Like clockwork, Apple product announcements were good for a 10% to 15% bump in AAPL stock in the ensuing weeks. That was when things like iPhones and iPads were truly new.
Now that Apple’s “new” product releases are met mostly with yawns and complaints, Google is helping fill that “wow-factor” void, be it through self-driving cars, Google Play, Google Fiber or, now, Google Lens. For those kinds of imaginative technologies, investors are willing to pay a premium.
Thus, GOOGL stock isn’t likely to stop at $1,000 a share, even after surging more than $100 since mid-April. Google Lens isn’t the only reason. It’s just the latest reason.
As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.
