Alphabet celebrates two decades on the stock market: A success story full of innovations

This week, Alphabet celebrates the 20th anniversary of its IPO. The company, once known as Google, has evolved into one of the most innovative corporations of the 21st century. Initially launched as a pioneering search engine, Alphabet has since expanded into diverse fields such as cloud computing, ad-based video and music streaming services, autonomous vehicle production, and health research. A particular focus is on investments in artificial intelligence and machine learning, which are significantly advanced by Google's Brain research team. Alphabet has benefited from numerous lucrative acquisitions. The company's stock has risen by 19% this year and has gained an impressive 6,000% since it went public in 2004. This success far surpasses the gains of the S&P 500 and Nasdaq. One of the most spectacular acquisitions was the purchase of Motorola Mobility in 2012 for $12.5 billion, which was crucial for establishing the Google Android ecosystem—Apple iPhone iOS’s biggest competitor. Some of the other noteworthy acquisitions include: - Where 2 Technologies (2004 for an estimated $400 million, led to the creation of Google Maps) - YouTube (2006 for $1.65 billion) - DoubleClick (2007 for $3.1 billion, implemented in Google Marketing) - Waze (2013 for $966 million) - Nest Labs (2014 for $3.2 billion) - DeepMind (2014 for $500 million, merged with Brain for AI development) - Twitch (2014 for $970 million) - Looker (2019 for $2.6 billion, for business analytics software and data analytics) - Fitbit (2019 for $2.1 billion) - Mandiant (2022 for $5.4 billion) Alphabet has pleased its shareholders multiple times with stock splits: in 2014, a 2-1 split was conducted, introducing two classes of shares—GOOG without voting rights and GOOGL with voting rights. In 2022, a 20-1 split followed. According to estimates by Zacks, Alphabet’s total revenue is projected to increase by 15% to $330.36 billion in fiscal year 2024 and by 11% in 2025. Annual earnings per share are expected to rise by 31% to $7.63, with a further increase of 13% in fiscal 2025 to $8.64. Currently, the stock trades at a price-to-earnings (P/E) ratio of 21.9 for the next year, slightly below the Zacks Internet Services industry average of 23.2 and the S&P 500’s average of 23.6. This is also significantly below the highest value of 37X in the past ten years and the median of 26X. Regulatory challenges such as the recent decision by the US Department of Justice against Google due to illegal monopolization could potentially pose obstacles. Nevertheless, with an average Zacks price target of $204.71 per share and an expected price increase of 22%, Alphabet remains an attractive investment.