- Alphabet (GOOG, GOOGL) bought a start-up that could bring Google Glass mainstream
- It also bought a cyber-security firm to beef up Google Cloud
- These are long-term bets that show management is focused on future growth
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has been on a bit of an acquisition spree these last few months. This isn’t exactly a new strategy for the parent company of Google. Alphabet generates so much cash from its traditional ad businesses that it can plow it back into emerging companies of the future. The company has made some potentially game-changing acquisitions in recent weeks. These acquisitions could unlock potential upside from GOOG stock.
| GOOG, GOOGL | Alphabet | $2,728.87 |
GOOG Stock: Google Glass Could Be Making a Comeback
The first acquisition I would like to discuss is the start-up Raxium. The deal has not been officially confirmed just yet. However if true could potentially be a lucrative one for Alphabet. Raxium is a five-year-old startup that specializes in microLED displays. These displays are can be used in augmented and mixed reality devices — an area that Alphabet has shown tremendous interest in the past.
Currently, MmcroLED usage is limited to expensive, large-sized screens like wall-mounted signage. But it holds plenty of promise for augmented and mixed reality (AR and MR) devices due to its energy efficiency.
It makes sense that Alphabet would be interested in acquisitions related to AR and MR devices. It wasn’t too long ago that the company launched the first few iterations of Google Glass. This was intended to be an AR device specifically targeting the retail market. While Google Glass has not yet reached mainstream acceptance, I am certain that Alphabet executives have not yet given up on the idea.
According to The Information, Google is planning to integrate Raxium’s microLED technology with the latest iteration of Google Glass. The device, codenamed Project Iris, is expected to ship sometime in 2024.
Alphabet Acquires a Major Cybersecurity Firm
The second acquisition Alphabet made this month is much larger and potentially more significant. The company purchased cybersecurity firm Mandiant (NASDAQ:MNDT) for $5.4 billion in cash. This is Google’s second-biggest acquisition ever and highlights the importance of cybersecurity in the digital age.
Google Cloud already offers customers a set of cybersecurity-related services. Mandiant is a recognized leader in strategic security advisory and incident response services. Its customers include leading U.S. government agencies such as the Federal Bureau of Investigation (FBI).
Therefore, the acquisition should boost the company’s offerings and help provide an end-to-end solution to its clients. This in turn will further strengthen Google Cloud’s value proposition allowing it to compete with the major players in the industry.
According to Thomas Kurian, CEO of Google Cloud:
Organizations around the world are facing unprecedented cybersecurity challenges as the sophistication and severity of attacks that were previously used to target major governments are now being used to target companies in every industry. We look forward to welcoming Mandiant to Google Cloud to further enhance our security operations suite and advisory services, and help customers address their most important security challenges.
Your Takeaway for GOOG Stock
Like in the case of YouTube or Waymo, investors might not see the benefits of these investments immediately. But rather, the company works on the technology in the background and slowly iterates it to perfection. This is truly a management style that will ensure value is created for shareholders over the long term. GOOG stock should be a core holding of any tech portfolio.
On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
