Google Stock Outlook 2017
Markets have been on tenterhooks ever since Google morphed into Alphabet Inc (NASDAQ:GOOG). Investors were confused about what it meant for GOOG stock, but everything is becoming clear. We can now say why it happened, and what it means for Google stock in 2017.
But before we go further, here’s a taste of what’s in store for the Google stock price in 2017:
- A new business segment potentially worth tens of billions of dollars.
- A new service that could be as popular as “Android.”
- A new device that could be bigger than the “iPhone.”
Each of the above represents a “trigger point” for Google stock. When a new technology or product reaches its critical mass, the “trigger point” fires, propelling the share price skywards.
You’ll recognize it when you see it. One second there will be calm; the next, every two-bit investor is scrambling to buy the same stock. It’s herd mentality, plain and simple. The market is phenomenal at ignoring emerging technologies until the last possible moment.
But the moment those technologies become undeniable, investors become rabid.
We can lay out a time frame when these events could come to pass, but obviously trying to forecast the exact moment of a trigger point is a fool’s errand. No one has a magic 8-ball.
Anyone who tells you that they know exactly when something will happen is either a liar or a fool.
Steer clear of those charlatans. Think in terms of the next decade. What technologies are going to explode in popularity? Which company is best positioned to exploit that popularity? Once you know the answers to those questions, you can sit back and relax.
The rest happens like clockwork.
Let me give you an example. In the fall of 2015, there was mounting excitement about new technologies like virtual reality (VR) and self-driving cars. A lot of analysts were bullish on the potential of these devices, as they should have been. Both technologies are going to be huge.
But most of them missed a crucial connection. Both driverless cars and VR devices had something in common: they both require advanced graphics cards. Self-driving cars need to understand the world around them, and that requires graphics cards.
Likewise, VR needs to give you the impression of being submerged in a digital world. That also requires excellent graphics cards. We saw that connection. We understood its importance and, more to the point, we understood which company was best positioned to win that industry: NVIDIA Corporation (NASDAQ:NVDA).
Chart courtesy of StockCharts.com
Since that time, NVDA stock has tripled in value. It shot up 204% in the 12 months since we turned bullish on the graphics card maker. But here’s the best part: both driverless cars and VR haven’t reached their “trigger points” yet; these gains were just the tip of the iceberg.
But what does all this have to do with our Google stock forecast 2017? Let me explain…
#1 “Trigger Point” for Google Stock Outlook 2017
Earlier in this article, I mentioned—or rather hinted at—three trigger points which could send GOOG stock surging in 2017. I also mentioned two questions that needed answering:
- What technologies are going to explode in popularity over the next decade?
- Which company is best positioned to exploit that popularity?
Based on extensive research (and conversations with industry insiders), we have identified three tech trends that are closing in on their “trigger points.”
As for the second question, the answer seems a little obvious. We clearly believe that Google stock will profit from these “trigger points,” or else we would have chosen a different stock to feature in this article.
But now let’s get into the details. The first of our three “trigger points” is an emerging technology trend which has slipped under the radar: Healthcare. I know what you’re thinking—what could a technology company do to impact the healthcare industry?
As it turns out, there’s a lot that a tech company can do for advancing diagnostic treatments. In this case, Google is making use of a company it acquired in 2014. The company, DeepMind Technologies Limited, was focused on “deep learning algorithms” and “neural networks.”
You may know those terms better by their more common name: Artificial Intelligence (AI).
There are a lot of companies hopping on the AI bandwagon, but Google has the cleverest strategy. It has embedded AI software into a range of healthcare apps that will help doctors detect diseases quicker and with greater accuracy. The potential for GOOG stock is amazing.
Imagine if you go in for a routine checkup at your doctor’s office. They do a few scans, the doctor barely glances at them, and then he sends you on your merry way. Fast forward a few years. You’re in for another routine physical, but this time they diagnose you with acute kidney injury.
Even with the best doctors that money can buy, there’s no guarantee that anyone could have predicted your affliction. So it’s not exactly the doctor’s fault. But that doesn’t help your situation.
Google thinks that artificial intelligence (AI)—or “deep learning algorithms,” to be more accurate—can help solve this problem. Its app basically churns through millions of kidney scans. Eventually it begins to understand how the disease evolves, which helps predict diseases earlier on.
Does it sound too good to be true? Well, apparently the National Health Service in the U.K. doesn’t think so. It is already using the app to catch early acute kidney injury. (Source: “NHS to use Google DeepMind AI app to help treat patients,” Engadget, November 22, 2016.)
It was a relatively small piece of news, so it hasn’t seeped into the Google stock price yet. However, the additional revenue from healthcare institutions could send GOOG stock skyrocketing in 2017.
The “trigger point” is all that’s left.
#2 “Trigger Point” for Google Stock Outlook 2017
The second major catalyst for Google stock is self-driving cars. Autonomous vehicles. Driverless tech. Whatever you call it, this trend is fast approaching its “trigger point.” Just look at the search traffic for the keyword “autonomous car”:
Chart courtesy of Google Trends
As you can see, interest in self-driving technology jumped dramatically over the last five years. This isn’t an accident. Companies like Tesla Motors Inc (NASDAQ:TSLA) and Uber Technologies, Inc. have made some high-profile investments into driverless technology.
But they weren’t the first. Google was the real pioneer of self-driving technology.
More to the point, Google is in a better position to win than Tesla or Uber. Rather than spending a bunch of cash on building cars. Google is just licensing the tech to existing manufacturers, much like it did with the Android operating system. (Source: “Google and Fiat agree to build a driverless minivan,” The Telegraph, May 3, 2016.)
When the smartphone wars reached their peak, Google didn’t just try to build its own hardware. It developed an open-source platform that other manufacturers could build on top of. It was a brilliant move that paid huge dividends. GOOG stock price has more than doubled since.
Likewise, big automakers—like Fiat Chrysler Automobiles NV (NYSE:FCAU) and Toyota Motor Corp (ADR) (NYSE:TM)—have already agreed to license driverless tech from Google.
Based on the success of Android, Google stock could be in for a huge tailwind once driverless tech has its “trigger point.” That scratches number two off our list, leaving us with one more “trigger point” to explore.
#3 “Trigger Point” for Google Stock Outlook 2017
Virtual reality is the third and final “trigger point” for GOOG stock. The technology is inching its way towards critical mass but, at present, only hardcore gamers and tech junkies have bought a VR system. That could soon change, much to the benefit of Google stock price.
Older and less tech-savvy consumers aren’t familiar with VR. To many of them, it sounds like science fiction. But rest assured that VR devices aren’t a thing of the distant future—they are available through Amazon.com, Inc. (NASDAQ:AMZN) and in Best Buy Co Inc (NYSE:BBY) stores around the country.
You can strap on one of these headsets and fall into another world. As someone who owns a VR headset, take it from me: this device is phenomenal. It is like nothing else you have ever experienced, which is why Goldman Sachs Group Inc (NYSE:GS) estimates a potential market size at $80.0 billion.
My only complaint is the limited amount of content.
Think about it: customers aren’t willing to shell out hundreds of dollars for a device when there are only a handful of games or movies to watch. They’d rather wait until more content is developed.
The good news is they won’t have to wait long. Production studios are tripping over each other to establish a foothold in the VR market. All of them know that VR devices could be bigger than the iPhone was in its heyday, so they experimented with new “VR experiences.”
Google is taking full advantage of its monstrous size in the VR world. Its first product was an inexpensive VR headset called “Cardboard.” It was exactly what it sounds like: a cardboard foldout headset that you put together and attach to your smartphone. It cost only $20.00.
Unlike its competitors, Google knew that customers were skittish about VR. So it gave them a low-risk option with “Cardboard.” If customers didn’t take well to VR, big deal. What’s $20.00 in the grand scheme of things? By contrast, competitors were selling VR gear for $600.00 to $1,600.
But excitement for VR is building. The technology is speeding toward its “trigger point” and Google knows it. In response to renewed interest in VR, the company has unveiled the “Daydream,” a high-quality VR viewer.
Granted, at $100.00 per unit, Daydream is more expensive than Cardboard, but customers are more familiar with VR now. They have access to more content and improved quality, so it makes sense for them to shell out the cash.
Moreover, this makes sense from a business standpoint. Google is ramping up its product offerings alongside the VR trend. This way, GOOG stock could be perfectly positioned when VR has its “trigger point.”
In summary: Google stock is on the cusp of extraordinary gains. This stock has already gleaned enormous returns for investors, but VR, autonomous cars, and AI could send GOOG stock soaring in 2017.