Can Shares of Alphabet Continue to Hit All-Time Highs?

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Shares in Alphabet Inc. (NASDAQ: GOOGL), owner of the world’s largest search engine, continue to reach all-time highs. It shares have hit $793, and its market cap is $535 billion, which is higher than that of Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A). Google’s shares may continue to move higher for several reasons:

  1. The competition among search engines is over. Google has at least two-thirds of the U.S. market, and more in some European nations. It may not have the same position in China, India and Russia, but search revenues in these countries are modest.
  2. Google is the largest Web property in the United States, thanks to its search business and YouTube. Advertisers who wish to reach large audiences buy ads on Web properties that give them more reach, and Google is at the top of the list.
  3. Google continues to have the advantage of market targeting. Advertisers can buy keywords that run next to the search results most critical to them. Google has had this advantage for some time. But its ability to target continues to prove itself as a better way to reach consumers than traditional display advertising.
  4. YouTube, the largest video property in the United States, posted revenue of $2 billion last quarter, based on Google’s disclosure of “other revenue.” Video advertising has become one of competitors, if not the primary one, in the rapidly growing video ad market. The market is important to online publishers because it commands prices much higher than display advertising models. YouTube also has begun to move into the premium video service, which allows users to pay subscription or pay per view to watch movies. YouTube is not as large a player in this business as Apple Inc. (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN), but YouTube’s unprecedented audience size gives it at least one advantage as the overall¬†market for streaming video grows.
  5. Google dominates mobile search. As one of the key components to mobile user needs, search is critical to the future of the Web. Its dominance will allow the company to get a lion’s share of mobile ad revenue, which is emerging as a major target market for advertisers.
  6. Google owns the largest mobile operating system in the world. Android runs on more mobile devices by far than any other operating system, followed distantly by Apple’s iOS. Android is another path to Google’s mobile dominance.

Google’s stock will not only move higher. It will eclipse current levels.

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