Yahoo Finance Alphabet (GOOGL) Gains From Strength in Google Services
Alphabet’s GOOGL shares have rallied 25.4% in the year-to-date period, outperforming the Zacks Computer & Technology sector’s growth of 19.4%. The company is benefiting from a strong Google Services segment driven by search, YouTube and Android.
Alphabet’s division Google is making concerted efforts to bolster the segment further.
Recently, Google introduced a new Notifications feature for one of its Android apps, Google Wallet. The Wallet app now has six notification categories, namely Tips, Purchases, Passes, Transit, Updates & Alerts, and Promotional Campaigns, allowing users to receive transaction notifications from Google Wallet directly instead of Google Play services.
The rollout of a new “Automatically add linked passes” feature to Google Wallet remains noteworthy. This new feature is an addition to the "Passes" sub-section in Google Wallet settings on Android. It allows providers to automatically add event tickets, promotions and offers to existing passes.
Growing Wallet app offerings on Android would allow Google to capitalize on growth opportunities present in the global digital wallet market, which, per The Business Research Company report, is expected to hit $47.7 billion in 2024 and reach $97.54 billion by 2033, witnessing a CAGR of 19.6% between 2024 and 2033.
Moreover, it would also place Alphabet at a competitive advantage over industry peers like Microsoft MSFT and Apple AAPL, which are also making strong efforts to strengthen their foothold in the global digital wallet market.
Microsoft’s addition of a cryptocurrency wallet to its Edge Wallet remains noteworthy. This feature provides real-time updates on cryptocurrency value fluctuations and logging transactions for effective monitoring.
Apple, on the other hand, is enjoying the growing momentum of Apple Wallet with the addition of new features. Its Apple Pay orders can now be attached to receipts as PDF or image files, allowing customers to track payment in the Wallet app and to confirmation emails.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Strength in Google Services Segment Aids Prospects
Alphabet has been taking continuous strides to boost its search and YouTube businesses in addition to Android, in a bid to strengthen its Google Services segment.
Google recently rolled out “Minimized Custom Tabs” for Google Chrome to improve the user experience and functionality of the Chrome browser, which, in turn, will likely boost the company's search engine.
Alphabet’s latest Cast menu redesign of YouTube is expected to expand YouTube’s user base. The updated Cast icon now features a floating bottom sheet with rounded corners, allowing users to control volume and voice search, and also provides remote control options for televisions.
In order to strengthen its YouTube business further, Google recently partnered with Peloton Interactive PTON.
This partnership marks a significant step for Google to expand its YouTube TV subscriber base, as it requires Peloton All-Access members to have a YouTube TV subscription in order to watch content while on their machine.
These efforts are expected to benefit the Google Services segment performance in the upcoming period.
The strengthening Google Services segment is expected to aid Alphabet’s overall financial performance in the near term.
The Zacks Consensus Estimate for 2024 total revenues stands at $295.53 billion, indicating year-over-year growth of 15.2%.
The consensus mark for 2024 earnings is pegged at $7.60 per share, indicating a 31.03% rise from the year-ago figure. The figure has been revised upward by 0.4% in the past 30 days.
Conclusion
We believe Alphabet’s strength in the Google Services Segment, coupled with its robust cloud division, growing momentum across Google’s mobile search and strengthening generative AI capabilities, make it an attractive stock for investors at the current level.
Alphabet is trading at a discount with a forward 12-month P/E of 21.74X compared with the Zacks Internet Services industry’s 22.40X.
The stock sports a Zacks Rank #1 (Strong Buy) with a Growth Score of B, a combination that offers a good investment opportunity, per the Zacks proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.
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