Markets Still Love Google’s Business

By Douglas A. McIntyre Published Apr 18, 6:55AM EDT

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Markets Still Love Google’s Business — © Justin Sullivan / Getty Images

Alphabet Inc. (NASDAQ: GOOGL | GOOGL Price Prediction), the revenue engine of which is Google, has had a stock price increase of 47% in the past year. That compares to a 20% gain for the S&P 500. Despite worries about the digital advertising market, the company’s dominant position in the sector may be what drives the shares.

Google has about 25% of the U.S. digital ad market, followed by Meta (mostly Facebook revenue) at 18% and Amazon at 15%. No other company has a double-digit percentage market share.

In its most recently reported quarter, Alphabet revenue rose 13% from a year ago to $86.3 billion. Operating income was $23.7 billion, up from $18.2 billion. (This is how much money Alphabet makes every minute.)

The company signaled that it would continue to watch costs. It laid off 12,000 people last year. Chief Financial Officer Ruth Porat commented, “We remain committed to our work to durably re-engineer our cost base as we invest to support our growth opportunities.”

Three engines drive Alphabet’s revenue. The first, Google Search, comes primarily from advertising at its own site. Revenue from this in the most recent quarter was $48.0 billion. The next business is what it makes from ads it runs on other websites. Google Network had revenue of $8.3 billion last quarter. Finally, YouTube, often described as the largest video site in the world, had revenue of $9.2 billion, the huge majority of which was advertising, although it has begun to enter the video subscription business.

If stock prices signal anticipation of future earnings, investors expect that the quarter about to be announced will be strong.

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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.