This tech stock is on a hot streak â and what comes next could be even bigger. Take a look... [Derby City Daily logo](
[Derby City Daily logo]( July 10, 2024 [Itâs a Great Year for GOOGL: Should You Be Buying?]( By Andy Swan Alphabet Inc. (GOOGL) is having a tremendous year. GOOGL shares have surged 63% from 2023; zoom out five years, and you're looking at a 232% rally: Source: TradingView Investors can thank the company for ramping up [advertising revenue]( (think Search and YouTube) and expanding its critical Cloud segment â both of which are helping drive GOOGLâs gains of late. But we have one big question: Has the stock gotten ahead of itself? Letâs dive in to answer that today... The Uncontested King Every second of every day, 99,000 queries are entered into a Google search bar, adding up to 5.9 million Google searches per minute â and 8.5 billion daily. Google is THE global search engine. See the red line on the chart below? Thatâs Googleâs share of the global search market: 91% as of June. Everyone else is at the very bottom... Source: gs.statcounter.com This dominant market presence contributes significantly to Google's bottom line. Its Google Ads platform generated a whopping $237.86 billion in 2023. Source: Statista This platform enables advertisers to display ads, product listings, and service offerings across a vast network that includes Google's own properties, partner sites, and various apps. (Search for just about anything on Google â "[modelo chelada]( for example, if youâre feeling thirsty â and thereâs a good chance the first few results came from its ads platform.) The takeaway: Advertising is king at Google, driving nearly 80% of its revenue. And it will continue to drive company growth in 2024. Take a look... SPONSORED AD [Man who Picked Nvidia in 2019: âThe Next 30 Days Will Be Criticalâ]( Legendary trader Tom Gentile predicted the rise of Artificial Intelligence more than five years ago and gave his readers a chance to turn $10,000 into... Almost $35,000 in shares of Meta... $42,600 in shares of Microsoft... and more than $325,000 in shares of Nvidia. [Heâs now issuing this critical AI warning for the next 30 days](. From the Election to the Olympics: Ad Spend Is Ramping Paid search spend is expected to grow by 10% year over year. This plays directly into Google's hand, with paid search being its primary driver of advertising revenue. Digital ad spending overall is on track for 7.5% year-over-year growth in 2024 â and Connected TV (CTV) will be the fastest-growing medium of them all, with spending on track to surge 14.5% year over year. (Connected TV refers to TV devices that connect to the internet; seems obvious when you put it that way, but good to know all the same.) Source: eMarketer Google can participate in CTV ad spend via its YouTube TV streaming service. In fact, YouTube is the top video [streaming service]( in the U.S. by viewership, according to Nielsen ratings, even topping [Netflix (NFLX)]( Source: nielsen.com On a global scale, weâre talking about over 1 billion hours of YouTube content being watched on TVs each and every day. Our Prediction: Ad spend will accelerate through the back half of the year, thanks to major events like the Olympics and Presidential Election â leading to a major boost in advertising demand. Dentsu, a major ad-buying firm, expects the [presidential election]( alone to contribute approximately $11 billion â or about one third â of the incremental ad spend on deck for 2024. Make no mistake, this election will cause chaos, [as you've learned](. But itâs also creating some truly incredible opportunities for investors, from a surge in ad spending to the five specific money moves [I outlined here](. So, Google has a huge opportunity in front of it in search and advertising. But what about Google Cloud, the other piece of its pie? Monetizing the Cloud Right now, Google Cloud is playing third fiddle to larger industry leaders like Microsoftâs (MSFT) Azure and Amazon.comâs (AMZN) AWS. However, ALL three major cloud players show continued growth, according to web traffic data. (Amazon Web Services leads with +10% YoY growth, followed by Microsoft Azure at +8.5% and Google at +7%.) While Google Cloud only accounted for ~10% of company revenue in 2023, which seems small compared to Advertisingâs near-80% slice, this segment contributes more each year. Perhaps most impressive is how Alphabet has been able to better monetize its Cloud segment: Operating income for its Cloud business more than quadrupled last quarter (hitting $900 million). Source: abc.xyz SPONSORED AD [Billionaires Dumping Nvidia, Buying This]( In another sign that weâre entering the final phase of the AI boom... Billionaires are now dumping Nvidia and investing in ETFs that have a broader market exposure. Are AI stocks a bubble ready to pop? Or is this AI boom just getting started? [Click here to see the answer from the legendary trader who predicted the rise of AI in early 2019](. Looking Ahead: Itâs All About AI From here, pay attention to how Alphabet integrates [artificial intelligence (AI)]( into its search feature. Early on, we saw some hiccups, likely born from [its new partnership with Reddit (RDDT)]( which created some... interesting summaries. But those seem to be improving. This should boost consumer engagement and contribute positively to ad targeting and corresponding spend. We also see enormous opportunity for disruption, particularly in search as AI creates new avenues for consumers to seek out information. To answer the question of whether you should be buying: As always, itâs up to you to decide â but weâre feeling bullish. And a bit of caution here is warranted. While near-term ad revenue from elevated spending may help support near-term growth, GOOGLâs long-term prospects may be hindered by growing competition and sky-high expectations. [Meta Platforms (META)]( for example, is proving to be the favorite for short-form video content â and this preference could eventually weigh on YouTubeâs ad efficacy. And [The Trade Desk (TTD)]( is capturing more and more ad dollars with its AI-powered ad platform. Still, itâs pretty incredible to watch [the AI boom]( push the S&P 500 to all-time highs. And if youâve followed along with our insights, youâve had no shortage of opportunities [to ride this wave higher](. But before you buy shares of another AI stock, [watch this eye-opening video]( that recently came across my desk. In it, you'll see another trader who was at the forefront of this mega trend issue a critical AI warning for the next 30 days. Itâs worth watching if you own GOOGL, META, Nvidia (NVDA), or any other AI stock for that matter. [Go here now to check it out](. Until next time, [Andy Swan's signature]
[Andy Swan's signature] Andy Swan
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