Is There Unrealized Value in Alphabet Inc (NASDAQ:GOOGL)?

July 21, 2017, 14:05 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Many analysts have recently written-off Alphabet Inc (NASDAQ:GOOGL) as a company that has peaked, which implies that the search engine giant has minimal potential for future growth.  

Although it is quite true that Alphabet Inc now faces stiff competition from Facebook Inc (NASDAQ:FB)  and Amazon.com, Inc. (NASDAQ:AMZN)  in the advertising sphere, the company still has significant potential for future growth through diversification.

Google competes on different fronts, but its main battle if for advertising revenues with the recent shift to advertising on social networking sites such as Facebook. Another major area of competition is in cloud services where Amazon competes directly with Google by offering similar cloud services.

Microsoft is also a major competitor with Google in the cloud services industry through its Azure cloud offering. However, the cloud services industry is a growing sector with room for all the three major technology companies to get their equal share of clients.

Despite the fact that Amazon.com and Google compete in the online advertising space, the two companies have embraced different strategies. Alphabet Inc has remained true to its core operations as a technology company while Amazon has diversified to an extent that it recently acquired Whole Foods Market, Inc. (NASDAQ:WFM).

Although Google has diversified its product portfolio to include services such as social networking through its Google+ platform, it is still largely a technology company. Alphabet Inc has also invested heavily in the artificial intelligence industry, which put it in direct competition with Microsoft and Oracle.

Therefore, it is clear that Alphabet Inc competes with all the major technology companies on different levels. However, Google still dominates the online search industry, a position which it is not about to be dislodged from by any of its competitors.

Alphabet Inc continues to improve its search engine business through algorithm updates targeted at improving the search experience of all its customers. There is significant potential for growth in Alphabet Inc’s cloud services and AI among others, which could generate significant growth for the company in future.

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