Why I invest long-term in Alphabet, Inc. (GOOG)

Alphabet (GOOG) is the parent company of Google. The company has many well-known services with billions of active users each: Google Search, Google Maps, Gmail, YouTube, Android, Google Play and Chrome.

In this post, instead of focusing on these services, I am going to expand on less-known areas where I believe the company has huge growth opportunities.

Image by Wikimedia Commons

🚙 Self-driving and ridesharing

• Alphabet is the parent company of Waymo (formerly known as Google self-driving car project). This company is considered the leader in the self-driving industry. On October 2018, Waymo announced that their driverless cars had already driven more than 10 million miles on public roads and 7 billions on virtual environments, this is far beyond all its competitors combined. The company has already set up partnerships with Fiat, Lyft, AutoNation, Avis, Intel and Jaguar Land Rover.
• Waymo has already started to test a self-driving taxi service in Arizona, and it’s also testing self-driving trucks in that State. According to Intel, self-driving industry could generate $800B in revenue by 2035, Waymo is on-track to be a leader on that industry.
• Alphabet owns an estimated stake of 5% in Uber and 5% in Lyft, thanks to investments made by its subsidiaries GV and CapitalG respectively. One of CapitalG’s partners is even on Lyft’s board.

📈 Investments and venture capital

• Alphabet is the parent company of CapitalG and GV.
• CapitalG invests in growth stage tech companies and helps them scale with support from Google’s vast expertise and resources. One of the key assets of this company is its connection with Google. CapitalG identifies where they can add value in the companies they are investing in, and connect these companies with Google experts.
• CapitalG has a portfolio with many large and promising companies, including: Snapchat, Airbnb, Lyft, Looker, Stripe, SurveyMonkey, Glassdoor, Zscaler, Duolingo and Cloudflare.
• GV is a venture capital firm which provides seed, venture, and growth stage funding to tech companies. Their portfolio also includes many large and promising companies, including: Uber, Jet, Medium, Nest, Lime and Slack.
• 🚀 Alphabet also owns an estimated stake of 7.5% in SpaceX. The company has an estimated value of $30B and it’s growing fast.

☁ Cloud Services

• On the last quarter, the headcount growth in the cloud division was the company’s biggest increase in operating expense. Google is the 3rd biggest cloud service provider and it’s investing heavily to catch up with AWS and Azure.
• The cloud industry is growing fast, but Google Cloud is growing even faster. The company offers great products, but I would highlight especially their AI and Big Data solutions. Google also has an extra edge on AI, thanks to its TPU chip. This chip has been designed specifically for running Google’s TensorFlow framework and can be many times faster than conventional chips.
• On April, Google announced a new platform called Anthos, which will allow customers to deploy and manage their applications multi-cloud, including on AWS or Azure.

👾 Cloud Gaming

• Google announced that its new cloud gaming platform Stadia will launch to 14 countries in November. The platform will have a free-to-play version with lower resolution and a subscription plan for $10 a month which will provide: 4K resolution, a selection of free games and exclusive discounts.

🤖 Artificial Intelligence

• Alphabet owns DeepMind, this company has been consistently achieving major breakthroughs on AI. The company made headlines multiple times on the last years, for instance, when it beat a professional player at the game of go and when it beat professional players at StarCraft II. But DeepMind is doing far more than training AI on games. In December, DeepMind’s AlphaFold demonstrated that it could predict protein structures far better than any existent technology. This advance can have a huge impact on how drugs are developed and it can allow to better diagnose and treat diseases that are believed to be caused by misfolding proteins, like Alzheimer’s and Parkinson’s.
• DeepMind also collaborates with Google solving tough problems with AI. For instance they reduced Google’s data center cooling bill by 40% and improved text-to-speech quality for Google Assistant and Google Cloud.
• Google is also investing heavily on AI and it’s using it across the entire company in order to improve internal processes and external products.
• Google Pixel phones use AI in order to improve its camera, battery and user experience.
• Google’s applied science team partnered up with TAE Technologies with the ambitious objective of developing clean, safe and commercial Fusion Energy, by applying machine learning to the experimentation process.

Read more about Alphabet on: https://inspectcompany.com/alphabet

Read our analysis for other companies:

• Microsoft (MSFT)
• Apple (AAPL)
• Facebook (FB)
• Amazon (AMZN)
• Netflix (NFLX)
• Tesla (TSLA)
• Salesforce (CRM)
• Electronic Arts (EA)
• Coca-Cola (KO)
• Nike (NKE)
• MercadoLibre (MELI)

I hope this post was useful for anyone interested in investing in the company.

My objective is to trade as transparent as possible, all my trades are publicly registered on my eToro profile.