As Alphabet Closes in on $1,000, Questions About Its Non-Google Businesses

By Douglas A. McIntyre Updated Jan 12, 11:22AM EST · Published Jun 5, 5:08AM EDT

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Alphabet Inc. (NASDAQ: GOOGL), parent of Google, YouTube and a small army of other business, sports a stock price of $996, and it is poised to hit the $1,000 a share mark, as Amazon.com Inc. (NASDAQ: AMZN) has just done. The question about whether Alphabet can get there, and stay there, relates to its non-Google, non-search businesses.

Alphabet’s revenue in the March quarter rose 22% to $24.8 billion. Google ad revenue was $24.1 billion of this. The balance was “other revenue” and “other bets.” Buried among these are Alphabet’s cloud business, its artificial intelligence operations, it Waymo driverless car business, Android, Google Play and other operations that are rarely talked about in public.

Alphabet’s core search business dominates the online ad industry, along with Facebook Inc. (NASDAQ: FB). The primary challenge to each of these is whether internet-based advertising will continue to grow well into the double digits. As some point, like broadcast and print, it has to slow. As that day comes, Alphabet’s valuation becomes more difficult to defend. The $1,000 stock price gets harder to hold.

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When Alphabet announced its latest earnings, Chief Financial Officer Ruth Porat said:

Our excellent results represent a terrific start to 2017, with revenues up 22% versus the first quarter of 2016 and 24% on a constant currency basis. We clearly continue to benefit from our ongoing investments in product innovation and have great momentum in our new businesses across Alphabet.

She neglected to mention that, in her own numbers, search represented the lion’s share and other businesses nearly nothing.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.