Alphabet Inc: The No. 1 Reason to Be Bullish on Google Stock

Alphabet IncGoogle Stock Continues to Deliver

What would life look like without Alphabet Inc (NASDAQ:GOOG)? As always, I remain intensely bullish on Google stock, because none of us could fathom a world without Google.

My smartphone is powered by Google’s “Android” operating system. I use “Google Chrome” as my Internet browser just to make sure the search engine is automatic. I simply wouldn’t be able to do my job without the services this company provides.

The same is true for tens (and maybe hundreds) of millions of people. Anyone who has dismissed this company as just a search engine or just an advertising firm is crazy. Google perennially surprises us with unorthodox shifts. This time is no different.

Last year, Google reorganized itself into the conglomerate we now know as Alphabet. The metamorphosis was supposed to make it easier for employees to toss up paradigm-altering ideas. It’s not that Google wasn’t already doing that, but the shift made it easier to see the company as more than its search engine service.

Although the name change was infamous at first, it was undoubtedly genius.

It has allowed Google to expand in ways we never previously imagined. Let me give you three examples that perfectly demonstrate how much this could impact Google stock.

Big Changes for Google

I’m sure many of you have heard of Spotify, the streaming service that has music industry executives wetting their pants. Users pay a flat fee in exchange for access to vast libraries of audio content. It’s basically Netflix, but for music.

Well, this growing company needs a lot of space on the “cloud.” It has tons of data that needs to be housed, so a lot of companies are hoping to build a relationship with Spotify. Nearly every analyst expected the music streaming company to go with Amazon.com, Inc.

Amazon’s cloud computing arm is the runaway market leader for infrastructure-as-a-service (IaaS). However, Spotify chose to go with Alphabet, citing the company’s diverse array of tools. It’s a big win that will almost certainly translate to huge revenue. (Source: “Sorry Amazon: Spotify Choses Google over AWS for big cloud deal,” [sic] Business Journal, February 24, 2016.)

Next up is the “Google Chromecast.” This $35.00 device started as a mechanism to make regular TVs into smart TVs. By bringing WiFi to regular TVs, the Chromecast effectively turned them into lo-fi “computers” that could browse the Internet, play YouTube, or even run Netflix.

Google’s Chromecast was an enormous success. Between 2013 and 2015, Americans bought 20 million units. Now, TV makers like Vizio are coming to Alphabet to get the devices embedded into all of their products. Talk about a game-changing product. (Source: “Google is putting its video streaming gadget directly inside TVs,” Business Insider, February 24, 2016.)

My final example is probably the most significant reason to be bullish on Google stock. In addition to being a mainstay in the digital world, Alphabet is now looking to become the main provider of Internet. It is going city to city, laying fiber optic cables that increase Internet speeds by a factor of four. Its latest target is San Francisco, the central hub of innovation in America. (Source: “Serving San Francisco apartments and condos, using existing fiber,” Google Fiber Official Blog, February 24, 2016.)

All told, these expansions are opening big revenue streams for Alphabet. The company that started as Google is showing that it has no ceiling, so maybe GOOG stock doesn’t have one either.