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Google Finance: Ads Revenue Shows Whopping Gain

Posted On August 14, 2017 4:54 pm
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A Google search engine screen under a magnifying glass

Alphabet Inc (NASDAQ:GOOGL) posted a strong second quarter results last month as Google finance continues to sore. The stock is up over 17% since the start of this year. The growth trajectory of Alphabet shows that the stock is set to surge in the coming months.

Google’s ads revenue increased by 18% year over year. Ads revenue accounts for a whopping 87% of the total revenue of the company. Alphabet Inc (NASDAQ:GOOGL)’s “other” revenue grew by 42% year over, thanks to a huge growth in Google Cloud, hardware and apps business.

Most of the Wall Street analysts love Alphabet Inc (NASDAQ:GOOGL) stock, and have a bullish outlook. Earlier this month, MKM analyst Rob Sanderson gave a “Buy” rating for Alphabet and set a price target of $1,210 for the next 12 months. Sanderson thinks that YouTube’s contribution to the company’s bottom-line was “unnaturally low” in the last quarter amid a major boycott of the platform by famous brands. The analyst thinks that Google’s revenue from YouTube will come back to normal in the next quarter, and the stock will go up. However, Mr. Sanderson fears that Alphabet Inc (NASDAQ:GOOGL) might face more fines from the European Commission in the coming months.

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Alphabet Inc (NASDAQ:GOOGL) remains the top search engine company worldwide. Google has quickly caught up in the mobile search market as well. According to the market research firm last year, eMarketer Google will take over 80% share of the ads market in the US in 2019, compared to 75% share in 2016. The firm said in a report that this meteoric growth is due to Google’s initiatives in the mobile search domain.

Analysts think that Alphabet Inc (NASDAQ:GOOGL) has a treasure in the form of YouTube which is yet to be fully galvanized to its true potential. In terms of Google finance, the company doesn’t reveal detailed stats about YouTube, making it difficult for the Street to correctly valuate the video platform. However, we know that the YouTube has 1.5 billion monthly viewers. While major companies like Facebook, Snapchat and Twitter are trying to make their users spend a few seconds on their videos ads, an average YouTube user spends 60 minutes a day on their phones and tablets watching videos. The company can expand this platform into TV and original series to crush content efforts of Amazon, Facebook and Snapchat.

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Alphabet’s revenue stream diversity is what makes it so special. The company is becoming a dominant player in Cloud, Artifical Intelligence, mobile apps, hardware, robotics and healthcare. As of the end of the second quarter, total Android device users around the world crossed 2 billion.  In 2016, over 82 billion applications were downloaded from Google Play store. Google’s Cloud revenue in the second quarter grew by a whopping 85%. These are the strengths in Google finance, which make it unbeatable in tough market conditions.

Last month, Goldman Sachs analyst Heather Bellini said in a note to investors that Alphabet Inc (NASDAQ:GOOGL) has some of the best secular trends in the tech industry, including search, YouTube, and enterprise cloud computing. The analyst thins that these growth domains will become a “bigger part of the thesis” in the coming months. Bellini has a buy rating and $1,100 price target for the stock.

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