Yahoo Finance If You Invested $1,000 in Google 10 Years Ago, How Much Would You Have Now?
There’s no denying that Google has significantly impacted people’s lives. When you have a question, you Google it. When businesses want to reach new customers, they turn to Google.
Since its IPO nearly two decades ago, Google has established itself among the most successful technology companies, helping pave the way for profitable businesses worldwide. But does all this success translate into positive returns for investors?
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Keep reading as we look into what $1,000 invested in Google 10 years ago would be worth today. We’ll also explore what has led to Google’s growth and what might contribute to the stock movement over the next decade.
What Would a $1,000 Investment in Google 10 Years Ago Be Worth Today?
From 2014 to 2020, Google stock exploded, appreciating more than 250%. Then the COVID pandemic hit. While most of the world came to a complete stop, Google’s stock price nearly doubled over the next 18 months. Unfortunately, things haven’t been as glamorous for investors since. In the past 2.5 years, it’s been an up-and-down battle.
“A $1,000 investment in Google (now Alphabet Inc.) a decade ago would have grown to $5,290 today, thanks to the company’s dominance in search volumes and digital ad spending, including YouTube’s substantial contribution to its revenues,” said Deiya Pernas, CFA and co-founder of Pernas Research.
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Pernas said that even though investors have realized a substantial gain over the past decade, there could be roadblocks soon.
“However, the rise of AI-driven platforms like ChatGPT presents a challenge to Google’s traditional search model by offering conversational AI experiences that could divert user traffic away from Google,” said Pernas.
What’s Been Affecting Google’s Stock?
In its early days, Google was primarily known as the leading search engine online. Today, it still owns nearly a 92% market share of all internet searches but has expanded to new business units like cloud computing, cybersecurity, wearables, smart home products and more.
Despite expanding into different verticals, Google’s revenue is still primarily driven by online ads. In 2023, their ad sales represented 73% of their overall sales revenue. That heavy reliance is why Google disappointed Wall Street when they reported earnings last month. Revenue was up 13% and their diluted earnings per share were up 56% in the fourth quarter of 2023, but ad revenue was only up 11%, coming in below analysts’ expectations.
Over the past couple of weeks, the tech giant has been under fire due to controversy surrounding its Gemini-powered AI chatbot. It disabled users from creating human AI images after the chatbot put people of color into Nazi uniforms. This is just the latest setback for Google, which has been trying to launch a sustainable competitor to ChatGPT for over a year.
Where Could Google’s Stock Price Be Headed?
Even though Google has disappointed in its most recent earnings, investors shouldn’t be too worried. They’re still seeing double digital revenue growth from ad sales, including a 16% increase in YouTube ad revenue last quarter.
However, where investors should be the most optimistic for the future is cloud computing and the effects of generative AI on their overall revenue. This past quarter, the unit saw a 26% increase in revenue.
“Looking forward, the company’s ability to integrate AI into its ecosystem and anticipate market trends will be key to its future success,” said Pernas. “Some say that Google’s culture has lost its dynamism, and they may not have the DNA to make large-scale shifts in strategy. This remains to be seen.”
YouTube TV is another unit that could help bolster Google’s numbers. Last month, they reported a total of 8 million subscribers, which is up from 5 million in 2022. This growth could be attributed to the company purchasing the rights to the National Football League’s NFL Sunday Ticket.
The most significant variable that could sneak up on Google’s stock price in the coming years is its ongoing legal battles and how they may play out. They recently came up short against Fortnite maker Epic Games, which means Google’s App Store may soon be open to competition. Many legal analysts expect the case to be heard by the Supreme Court before a final judgment is made.
Beyond product development, one of Google’s most important future assets is its cash. By the end of 2023, Google had over $111 billion in cash and cash equivalents on its books, with only $13 billion in long-term debt.
“While Google’s past decade has been marked by growth, its next decade will hinge on adaptation and innovation in an increasingly AI-driven digital world,” says Pernas.
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This article originally appeared on GOBankingRates.com: If You Invested $1,000 in Google 10 Years Ago, How Much Would You Have Now?
