Google Q3 - Growing At 40%

Last night Alphabet, the parent company of Google, Android and Youtube released third-quarter results. As expected, the numbers were impressive. Revenues came in at $65 billion, 41% higher than this time last year. Net income came in at $19 billion, up 68% versus the comparative period. Wow!

Take a look at the image below for a good breakdown of the Alphabet business by revenue. Search, YouTube and Google Cloud are all powering ahead. CEO Sundar Pichai attributes this to the big investments they made five years ago in artificial intelligence, making their search products more effective and efficient. It also made the cloud business more competitive. Google Cloud is slowly catching up to the top two players in the market, which are Amazon (AWS) and Microsoft (Azure).

The Alphabet share price has doubled over the last 15 months. Even after that big increase, the price-to-earnings ratio for this year sits at 26 times. For a company growing at 40% that is cheap. Basically, earnings have been growing faster than the share price. Alphabet sits at the forefront of digitisation which has been accelerated by a global pandemic. This is a must-own share in every portfolio and should be accumulated at current levels.