No doubt as an internet browser, you have generated revenue for Google. How? By clicking on Google Ads and AdSense ads that advertisers pay for per click. Because Google’s advertising engine is everywhere on the internet, the biggest challenge of Alphabet (GOOG), the parent of search engine giant Google, is not making money but diversifying its revenues. A broad diversification strategy is starting to pay off. Google Cloud and Google Home are leaders in high growth businesses. And Google’s once lofty plans for self-driving cars, drone delivery services and internet beamed from helium balloons are starting to generate revenues, and could even surpass the colossal ad spending business. Will GOOG stock also fly?
This guide will explain how to buy Google stock, evaluate the best Google stockbrokers, and assess the future performance of the company by looking at how the opportunities and challenges ahead could affect Alphabet’s stock value.
Should you invest in Google?
Pros to buying Google stock
The world’s favourite search engine is powered by multiple business lines today. The majority of revenues, though, still come from gobbling up global ad spend revenues. Google’s ad revenues have been growing at an annual rate of 14 percent over five years. When deciding whether to invest in Google stock, you should consider all these key growth drivers:
Dominant share of global digital ad spend market – As the $273 billion global digital ad spend market doubles by 2022 (eMarketer.com), Google will gain the lion’s share of the revenues. The search engine giant commands over 80% of the global desktop search engine market and 95% of the global mobile search engine market.
The other business devouring ad spend revenues is YouTube, which Google bought in 2006. Video makes up 25% of digital ad revenue. Google does not report YouTube ad revenue, though Robert Baird reports 2018 revenue to be $15 billion, about 10 percent of Google’s $116 billion in ad revenues.
Investment in AI driving future growth – AI is behind Google’s plan to take on Tesla. Google is showing off new artificial intelligence (AI) tools that will not only steer its self-driving cars but also create more value in its advertising networks. Although paid advertising click growth is strong, the cost per click (CPC) continues to decline. As one example of how AI can improve ad performance, AI bots are switching to more responsive ads as the deep learning engine identifies which ads work best with search terms.
True to its reputation as a big R&D spender, Google has two think tanks, Google Brain and DeepMind. Google is applying AI in applications ranging from Google Photos and Google Translate to Google Home and Waymo self-driving cars. In the cloud computing business, which is now growing faster than search, Cloud AI is making AI tools easily accessible to enterprises.
Google Cloud and other services – Google Cloud uses machine learning to help enterprises make their data smarter. Number three in cloud services, behind AWS and Microsoft, and growing faster than the search biz, Google Cloud will invest billions in data centers in 2019. Google Home, which includes Google Assistant and speakers, is another fast-growing business in this segment. Revenues from Other Services is growing and taking a slice from the ad spend share, jumping 31 percent in the fourth quarter, to 16 percent (up 1.5 percent) of revenues.
Cons to buying Google stock
Low revenue diversification – Ad spending, which grew 23 percent to $136 billion in 2018, comprises 86 percent of revenues. Rising traffic acquisition costs in recent years have contributed to narrower profit margins in 2018. In coming years, Google Other Services and Alphabet’s other subsidiaries, especially self-driving car Waymo, will help widen profit margins.
Low China market share – China, the fastest growing country for digital ad spend, is the one country in which Google does not dominate the search engine market. Baidu is the search engine leader in China with a more than 80% market share, while other Chinese players make up most of the remaining 20 percent.
Risks of data breaches and scandals – One of Google’s biggest business risks is misusing the growing volumes of data its search engine and cloud centers process. Google, like Facebook, has been involved in data harvesting scandals. In 2018, Google’s foray into instant messaging with Google+ was shut down after the data of 52 million members were exposed.
Google Stock: Current Prices and Summary
Unfortunately, Google Assistant cannot tell us what Alphabet’s stock price will be in one or five years. But we can make a fairly accurate prediction based on a long history of delivering consistent revenue and earnings performance.
When a stock is declining, the first question to ask is whether the cause is wider industry trends or a problem with the actual business. The first is an ideal scenario for investors to pick up an undervalued stock, and fortunately, the current situation of Google. Along with other FAANG stocks (Facebook, Amazon, Apple, Netflix, Google), Google started declining in the final quarter of 2018.
In 2018, both earnings and revenues beat analyst expectations, indicating that there are no serious problems in the underlying business. Google registered a ninth consecutive year of 20-plus percent revenue growth. Owing to its strong top-line growth, Citi has just made GOOG its favourite Internet stock pick. After reporting fourth quarter revenues in February, Alphabet was trading at a price-to-earnings ratio of 22, below its 5-year average of 30. Its price-to-future earnings – analyst estimates of future earnings – was also trading below its average. These attractive valuations could indicate it is a good time to invest in Google stock.
GOOG stock summary
|Price||$ 170.93||Daily high||$ 171.44|
|+ / -%||00:30%||Day before||$ 170.42|
How to Buy Google Stock – Tutorial
How to buy Google stock on eToro?
eToro has established itself as a reputable and trusted broker among traders since it launched in 2007. The leading online broker for social trading is regulated in several jurisdictions, including by the UK’s Financial Conduct Authority (FCA). Features include social feeds, research and One Click Trading. When deciding whether to buy Google shares on eToro, consider these pros and cons:
- Fast account opening process
- CopyTrader™ platform
- CopyPortfolios™ across an investment theme
- One-click trade execution
- Low fees
- Low minimum deposit (200 euros)
- Range of payment methods
- User-friendly interface
- Full BCH trading
- Withdrawals can be slow
- Mostly CFDs
Start trading Google stock on eToro
Step 1: Register your account
Fill out your basic profile information.To determine your investor risk profile, you will be asked to answer a few short questions about your investment experience, knowledge and strategy, as well as your risk-return level.
Step 2: Verify your identity
Attach and submit proof of identity for verification. US-based accounts are not accepted.
Step 3: Fund your account
eToro provides a wide variety of payment methods. Check to see if your preferred method is available in your country.
Step 4: Trade Alphabet stock
On eToro, you can invest in Alphabet through traditional securities trading and social investing. eToro assigns the portfolio of every trader a risk score based on the volatility – average daily price movement – of the instruments invested in on a scale of 1–6, 6 representing the highest risk. Here are three ways to invest in Google stock on the leading social trading platform.
Step 4A: Place an Alphabet stock trade
To buy Google shares, click on Trade. Select the Market (current price) or other price level you want to enter the market at. Enter the amount you want to trade and leverage (X1, X2, X5). Your Stop Loss and Take Profit levels are preset by you. You can also set up a One Click Trade option and preset the above parameters. (The Alphabet stock profile page provides social feeds, stats, charts and research. Social feeds often provide helpful technical analysis tips and updates on how a stock is trading relative to its peers.)
Step 4B: Place a CopyTrader™ trade
Choose from the selection of copy traders by reviewing their risk score, trading performance stats, charts, and portfolio. Check out the traders on the Editor’s Choice list. Click Copy. From the copy trade box, choose the amount you want to trade and the copy trade stop limit. Press Copy.
Step 4C: Place a CopyPortfolios™ trade
Choose a portfolio among dozens of investment themes. CopyPortfolios™ copies multiple portfolios and traders following that theme. We chose the NASDAQ100 theme portfolio, which has a high Risk Score of 6. Since Alphabet is a top holding of the NASDAQ100, investing in this portfolio is one way to buy Alphabet stock.
Review the risk profile and portfolio performance. Click on Invest. From the Invest box, choose the amount you want to invest and the stop investing limit.
How to buy Alphabet stock on Markets.com
The official online broker of the Arsenal Football Club provides all the basic tools and education a retail trader requires. markets.com is owned by Playtech, a public company listed on the London Stock Exchange. Like its PlaytechOne one wallet – one account solution for playing on casino, poker, sports and other gaming sites – markets.com seeks to provide quick and easy access to a good range of investment products. When deciding whether to buy Google shares on markets.com, consider these pros and cons.
- Day traders
- Demo account
- Low commissions
- Good quality news flow
- Good set of analytical tools
- Limited order types
- Not many deposit options
- Customer services not very effective
- Unregulated broker
Start trading Google stock on markets.com
Step 1: Register your account
You will be prompted to download the markets.com mobile app to register. After filling in basic profile information, a brief questionnaire on investment experience and knowledge, as well as income and assets, will determine your trading level and leverage. 1:30 is the leverage for the average retail investor. So with a $500 deposit, you can trade up to $15,000.
Step 2: Fund your account
If depositing by credit card, you will need to first have it verified. Click on Verify Credit Card on the My Account Page.
Step 3: Verify your identity
Attach and submit proof of identity and a utility bill for verification. Residents of the USA, Canada, Australia, Hong Kong, Japan and some other countries are restricted.
Step 4: Trade Alphabet stock
On Markets.com, you can choose to invest in Google shares, or a wide range of ETFs and indexes with exposure to major technology stocks. Other securities include forex, cryptocurrencies (a handful of majors), bonds, blends, and grey markets in Uber and Lyft ahead of their IPOs. Trending Now displays a list of top moving stocks.
The Alphabet stock profile provides basic stock price charting information and a market sentiment indicator. Place the trade by choosing the Buy or Sell button.
How to Buy/Sell Alphabet CFD Stock on Plus500
Novice retail traders may find this platform lacks the trading interface, research tools and education they depend on for general guidance. The experienced trader with their own tools, stock data and news will be at home with the simple, intuitive interface and over 100 technical indicators. Traders who qualify for a professional account (with a minimum portfolio value of €500k) can raise their leverage levels, for example, from 1:5 to 1:20 for stock trades. When deciding whether to trade Google sCFD hares on Plus500, consider these pros and cons.
- FCA regulated
- Listed on the LSE
- Easy to use platform
- Great mobile platform
- High order volume
- Experienced traders only (no fundamental data)
- Only CFD trading
- High financing rates
- No scalping allowed
Start trading Google CFD stock on Plus500
Step 1: Register your account
Firstly, click here to open your account. You will be prompted to download the Plus500.com mobile app to register. Select between a Demo and Real Money account. After filling in basic personal information, you will gain access to the unlimited demo account. Before you can buy Google CFD stock, you will be prompted to answer a few questions to establish your investor risk profile.
Step 2: Fund your account
When you are ready to trade with real money, fund your account. Three payment options are provided. You may be asked to verify your payment method.
Step 3: Verify your identity
Attach and submit proof of identity for verification.
Step 4: Trade Alphabet CFD stock
Plus500 offers a wide variety of CFDs on investment instruments, including stocks, ETFs, indexes, forex and cryptocurrencies. Options are also available for the advanced investor. Query Alphabet and the price quotes for the stock, as well as put and call options, appear on the screen.
All stock information and the Buy/Sell commands are displayed on the general stock page for the serious trader who wants to execute quickly. The bottom half of the page displays the price chart and provides access to a broad selection of technical analysis indicators.
80.6% of retail CFD accounts lose money
A Brief Overview of the History of Google
Google was created in 1998 by two Stanford university students, Larry Page and Sergey Brin, who created a page rank algorithm that produced more accurate search results than other search engines. Once Stanford’s search engine was made available to the general public, it quickly took off. As search volume soared, Google applied a click-through ad model that used keywords to attract browsers to web pages. This ad spending model now produces $100 billion in annual revenues for Google.
Google quickly established itself as a leading research and development technology lab by making developing innovative research part of its corporate culture. Notably, the search engine empowered employees to spend part of their time developing their own favourite research projects. Under a division called Bets, many projects have both flourished and failed. Successful projects have quickly become market leaders, including leading internet browser Google Chrome, mobile operating system Android and cloud computing player Google Cloud. In 2015, Google placed all of its businesses under the corporate structure Alphabet in order to focus more resources on developing new business lines.
2019 – Other services growth
The average 2019 forecast for Google stock is $1,350, with an estimate of $1,100 on the low end and $1,500 on the high end. The company that keeps finding better ways to organize and monetize online information will continue to record strong growth from search and non-search businesses. In 2019, the stock price should reflect higher growth in Other Services businesses. These include Google Cloud and Google Home. Google will spend $13 billion on US data centers this year on its cloud business. It has an enviable advantage in the smart home market with Google Assistant, which is already installed on over 400 million Android mobile devices and hardware products. Google’s Android operating system has an over 70 percent mobile device market share. Google Home Mini is the best selling smart speaker. Median stock growth is expected.
2020 – Growing pains
Alphabet’s ongoing challenge is rising costs. Not coincidentally, research and development costs have doubled to $6 billion in a little over two years. This coincides with the restructuring of Google under Alphabet, whose very purpose was to funnel more resources towards developing innovative new products. Advertising costs will continue to rise. Revenue growth will be strong in 2020 but profit margins will continue to be squeezed until more of Alphabet’s projects drive out of the lab. Analysts expect earnings growth to decline slightly. This could be an opportunity to buy Google shares. Modest stock growth is forecast.
2021 – Alphabet sings
Google’s higher profit margin Other Services revenues from Google Cloud and Google Home could take more than 20 percent of revenues by 2021. Alphabet will start generating revenues from new product rollouts. Google X’s plans to suspend internet antennas 60,000 feet in the sky from helium balloons is no longer a pie-in-the-sky idea. Kenya is the first installation for Loon. By 2021, this business should be a revenue generator. The drone delivery service Wing has deployed in Finland. The 11.2 billion drone market in 2022 will grow at a CAGR of 21 percent to $29 billion by 2027 and Google Wing is sure to have a slice of it (ResearchandMarkets).
2022 – Smart homes and cities
Other Services revenues and profits keep growing. Residents could start moving into Sidewalk Labs 12-acre connected city in Toronto this year. Whether or not Alphabet succeeds in its request to collect $6 billion in property taxes over 30 years, the connected city will be a big boost to Google Home sales. Google has 34 percent of the smart speaker market, which is expected to more than double to $27.8bn by 2022 (IDC). The global smart home market will be worth $55.5 billion (Statista) this year. The global economic slowdown, though, could contribute to modest stock growth.
2023 – The self-driving car
Alphabet subsidiaries Waymo, Wing and Loon will start taking a larger share of revenues. As Waymo officially launched with its commercial taxi service in December 2018, analysts enthused that the driverless car could make up most of Alphabet’s revenues in a decade as 600,000 cars hit the road. UBS valued the taxi service revenues at $118 billion by 2030, not including commercial delivery or logistics. Waymo could gain synergies from its investments in Lyft and Uber. Waymo will generate $1 billion in annual revenue by 2020 and $50 billion in annual revenue by 2029, estimates Bank of America. Strong revenue and stock growth is forecast.
So, should you buy Google stock? Can Alphabet be as successful in autonomous cars, flying drones, and floating internet services as it has been in the internet search and browser businesses? We think Google’s parent’s high spend on research and development will translate into high revenue and earnings growth long term.
When you are ready to buy Alphabet stock, we recommend doing so via a regulated online broker such as eToro if you’re a UK customer, and Ally Invest for U.S. customers.
In 2015, Google Inc. formed a new holding company Alphabet Inc. Alphabet
now trades under the Google stock symbol GOOG. Google is now a subsidiary of Alphabet, along with companies started by Google, including
Calico, Chronicle, Capital G, Verily, Waymo, X, GV (formerly, Google Ventures), and others. A dedicated management team can now focus on the core business of each subsidiary – for example, Google on the internet search and related businesses.
Growth companies return value to shareholders in the form of increases in stock value and invest cash flows in acquisitions to sustain growth. Google has made over 200 acquisitions over the decade. Over the last 10 years, an investment in the S&P 500 with dividends reinvested would have returned 15.5 percent whereas GOOG returned 17.1 percent over the same period.
Google has a 92.25% share of the global internet search market, followed by Bing (2.41%), Yahoo! (2.07%), and YANDEX RU (0.63%). Google processes 3.5 billion searches a day, or 1.2 trillion searches a year. A Google search produces 1.2 million references to Google as the “search giant.”
Google’s parent is one of the most widely held stocks by indexes, mutual funds, and ETFs. An index diversifies risk by tracking the weighted average price of a group of stocks. Indexes that hold Alphabet include:
NASDAQ 100 Index (NDX)
S&P 500 Index (SPX)
S&P 100 Index (OEX)
S&P 500 Consumer Discretionary (S5COND)
Indexes and ETFs provide a cheap way of getting diversified exposure to five of the highest performing technology stocks, known as FAANG (Facebook, Apple, Amazon, Netflix, Google). Many ETFs and indexes have a heavy weight in the FAANG stocks, including the NASDAQ-100 Tech and the NYSE FANG+ Index (NYFANG).
You can buy Google stock from online stockbrokers. eToro and Plus500 are examples of online broker platforms where traders buy and sell Google shares. After signing up online, type in the GOOG ticker, place your order and you will become an owner of Google shares.