Due to the shaky truce in the U.S.-China trade war, several sectors, especially the technology subsegment, are still under doubt. However, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) likely offers a rare exception. Through its myriad businesses and ventures, Google stock presents a compelling buying opportunity, irrespective of background fundamentals.
Additionally, its technical resilience provides confidence for the longer-term argument. For instance, the Alphabet stock price plummeted in late April 2019 due to a disappointing first-quarter earnings report. While the internet giant beat on per-share profitability, analysts sharply criticized its revenue miss.
Moreover, the Alphabet stock price continued its descent up until early June. But from there, GOOGL found serious traction. Currently, shares are up 18% year-to-date, a week ahead of their third-quarter 2019 earnings report.
Usually, it’s a fool’s errand to guess the near-term movement of any company, let alone a giant like GOOGL stock. But for the long haul, I believe investors can take heart. Here are three reasons why:
Search Engine Dominance Gets More Dominant
The beauty about Google stock is that no matter what happens, the underlying company has a moat. Even more impressive, that moat is the internet.
Of course, Alphabet, like other tech rivals such as Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), is actively diversifying its revenue streams. Amazon isn’t content at dominating e-commerce, and neither is Microsoft for software and various computer applications.
However, the difference with GOOGL stock is that parent company Alphabet doesn’t necessarily have to diversify. While Amazon is clearly the king of e-commerce, big box retailers like Walmart (NYSE:WMT) and Target (NYSE:TGT) are chipping away at its market share. For Microsoft, the rise of other competitors, technologies such as cloud computing, and open-source platforms forced it to diversify.
With Alphabet, its Google search engine has no other competition. Thanks to its near-93% market share in the global search industry, you have Google and everyone else.
Interestingly, since at least September 2018, Google’s market share hasn’t dropped below 92%. In May of this year, market share dipped to 91.9% — hardly cause for concern.
And even with the competition throwing everything at Alphabet, Google’s market share has only improved. Back in 2015, market share dropped below 90% for a few months.
In other words, competition only increases Google’s dominance. That’s bad news for rivals, but great news for GOOGL stock.
“Other” Reasons to Buy Google Stock
Because Alphabet is intent on disrupting multiple industries, it features an extensive income statement. For their more speculative ventures, management lists them as “Other Bets.”
On the surface, that might sound like a dismissive label. And perhaps for most companies, it would be. However, Other Bets represents serious potential, and this segment is only rising in relevancy.
At the beginning of this year, I covered three reasons why you should buy Google stock, with driverless taxi service Waymo being at the top of the list. Because of Waymo, Alphabet is essentially leapfrogging Uber Technologies (NYSE:UBER) and Lyft (NASDAQ:LYFT), both of which are themselves innovative organizations.
Recently, though, Other Bets stepped up to the plate again with their drone unit Wing. This is the country’s first commercial drone delivery flight. More importantly, like with Waymo, Alphabet leapfrogged its rival, this time the ultimate disruptor Amazon.
As you know, Amazon has been increasingly exploring avenues to consolidate its broad supply chain. With drone deliveries, they could kill two birds with one stone by taking out courier services and the human element. However, Alphabet beat them to the punch, which shows you Other Bets’ tremendous reach. It also confirms the viability of the longer-term narrative for Google stock.
Even Disparate Synergies Offer Potential for GOOGL Stock
Speaking of Amazon, what makes the e-commerce and tech firm so compelling is its never-ending reach. To the chagrin of those who stand in Amazon’s way, the organization refuses to stay in its lane. For instance, Amazon famously bought out Whole Foods Market, which doesn’t directly relate to technology.
Alphabet operates with the same mentality. About two weeks ago, Color, a genetics testing firm, partnered with Alphabet subsidiary Verily Life Sciences to provide actionable analysis from test subjects’ results.
Currently, the genetics testing industry has been limited to unlocking ancestral data. While undoubtedly an interesting and important endeavor, such knowledge doesn’t do much tangibly. However, with this new partnership, the end goal is to provide health risk probabilities. That way, health professionals can help mitigate major problems before they occur.
It’s an incredibly forward-thinking initiative that has the potential to save many lives. Subsequently, Google stock is a disruptive investment that you can feel good about.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
