At the end of the day, seasoned investors know that investing in markets has a large element of gambling to it. Despite all the research, whether top down or bottom up, markets have that element of chance that looms large. But as far as bets go, Alphabet Inc (NASDAQ:GOOGL,NASDAQ:GOOG) feels as close to a sure thing as one can get.
The third quarter demonstrated that GOOGL isn’t having trouble sustaining high double-digit growth rates. Revenues were up 24% year-over-year and operating margins improved by 200 basis points as well.
GOOGL’s Other Bets
Other Bets revenues, in particular, was very positive. The segment delivered 53% year-over-year growth and, while the total amount for the quarter was a tiny $302 million in comparison to advertising revenues of over $24 billion, it is on the rise. Investments that fall under the umbrella of Other Bets may take longer to monetize, but I have long held that the potential for coming up with another disruptive business lies in this segment.
Businesses that are included in Other Bets include Access, Calico, CapitalG, GV, Nest, and Waymo — though the majority of revenues come from Google Fiber, Nest products and services, and licensing/R&D services through Verily.
Specifically, Waymo seems to be on the precipice of becoming a leader in the autonomous vehicle industry, which may surprise some given that GOOGL is not an automotive company. However, because of GOOGL’s technological edge, they have been able implement the software and hardware changes necessary to make this a reality, while traditional auto makers are more focused on energy efficiency.
GOOGL has been working on this technological breakthrough since 2009, and indications are that they have the lead with early riders already on the road.