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Ah, the S&P 500 IndexA place where fortunes are made, lost, and sometimes found again behind the couch cushions. But among the raging waves of Wall Street, there is a mighty ship that I am determined to sail until I am old and gray (or at least until I can afford that yacht I have been eyeing). Ladies and gentlemen, I present to you: Alphabet (NASDAQ: GOOGL).
Diverse growth
Let's start with the obvious. Google is to search engines what… Kleenex is for fabrics. It's not just a product, it's a verb. When was the last time we heard someone say “Let me look that up for you“Exactly. With a staggering 91% of the global search market, Google is not only winning the race, it is outpacing the competition.
But Alphabet is more than just a single-product purveyor. YouTube? That's Alphabet. Android? Alphabet again. Chrome? You guessed it. The company has its fingers in more pies than a clumsy baker.
The company's balance sheet is more than impressive. In the last year alone, the firm made $328 billion in revenue, a figure larger than the GDP of some small countries. And it's not just sitting on its $100 billion in cash like a dragon on a pile of gold. Strategic investments are turning into profits faster than I can say “advertising revenue.” With a net profit margin of 26%, they're not exactly growing at a slow pace, either.
A bright future
In my view, management is not content to rule today's technological world. With artificial intelligence, self-driving cars and cloud computing, the company is competing directly with Tesla, amazon and Microsoft.
And let's not forget the company's Other Bets category. It's like the company's mad scientist lab, cooking up the next big thing. From Internet-transmitting balloons to life-extension research, the team is throwing spaghetti at the wall of the future, and it seems like a lot of it is sticking.
As if all this weren't enough to pique investors' curiosity, the stock recently started paying dividends. Sure, with a 0.5% yield, it's not like investors are going to retire to the Bahamas tomorrow, but it's a start and shows that the company is confident enough in its cash flow to share the wealth.
It’s worth noting that there are still plenty of risks. Is it the perfect company? Of course not. No company is. It faces enormous challenges, such as antitrust scrutiny and the ever-present threat of technological disruption. As generative ai becomes the norm, it’s unclear how advertising revenue and traditional search will be affected. I fear there’s also a risk that management will be forced to spend even more than expected to keep up with competitors’ investment in the rapidly growing ai space. After a period of tremendous stock growth, any such impact could trigger a sell-off.
The final result
That said, Alphabet is the S&P 500 stock I plan to hold on to more than a child to its favorite teddy bear. To me, it's not just a company, it's a ticket to the future. And I, for one, am buckled up and ready for the ride.
