Google delivered a 1000 percent return in ten years

Shareholders of the Google parent company have been looking forward to rising prices for years. Nobody seems to be able to harm the powerful corporation. The prospects for the future are apparently bright – also thanks to the new cloud business.

Billions in investments: Google wants to catch up with its competitors in the cloud business.  Here the trademark at a cloud fair in Hong Kong in 2019

EThere are stocks that create the “wow factor” for many investors. That is the saying when you look at the chart and see how a stock price has developed over many years. One such security is certainly Alphabet, Google’s parent company.

Over a ten-year period, an investor could make a return of more than 1000 percent with the share. In other words. Anyone who invested 10,000 euros in the search engine of that time a decade ago now has a deposit position of more than 110,000 euros. This is also reflected in the current market value of the Alphabet shares. Currently, an investor has to invest more than 2000 euros to receive just one share.

The fact that the share could become significantly cheaper in the near future apparently does not seem to be the case on the part of chart technology, after the price climbed to historic highs a few days ago. Even if a setback is to be expected in the short term after the steep rise, the trend arrows for the security continue to point clearly upwards: Alphabet shares have been listed in an overarching upward trend since the financial crisis year 2009 and have since increased by an average of 28 percent per year to.

Alphabet

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To the detailed view

The latest news is unlikely to change that much. The group is once again in the focus of the competition watchdog. The Bundeskartellamt is currently tackling one tech giant after the other. That is unlikely to deter long-term committed investors from getting involved or even to drive shareholders to part with shares. This is especially true when you consider that many digitalization trends have gained momentum as a result of Corona and Alphabet is one of the big winners. The American group has a diverse field of activity and is by no means only active in Internet advertising.

More than just advertising

In recent years, the video platform YouTube in particular has proven to be a growth engine. In this case, too, the corona crisis had a positive effect. People stayed home more often and tried to distract themselves with Internet videos. YouTube competes with Netflix or Disney + for the time Internet users spend watching online videos. In the first quarter of 2021, the group generated sales of $ 6.0 billion from advertising on YouTube. This was a significant increase over the previous year’s value of $ 4.0 billion.

Our author Christoph Scherbaum is a stock exchange specialist and works as a financial journalist from Ludwigsburg.
Our author Christoph Scherbaum is a stock exchange specialist and works as a financial journalist from Ludwigsburg. : Photo: Private

The Google Cloud division also experienced very strong growth. Revenue recently climbed 45.7 percent to $ 4.0 billion. The storage of data on external servers and software from the Internet are important future fields. With this, the group wants to diversify its business even more. However, with its Google Cloud Platform (GCP), when it comes to the cloud business, Google is a bit late compared to major competitors such as Microsoft Azure or Amazon Web Services (AWS).

The two American competitors have already started with a head start. AWS, for example, was established as a subsidiary of the e-commerce giant Amazon in 2006 and today scores with a long history. However, how serious Google is to catch up with Microsoft and Amazon in the cloud business is shown by the fact that in fiscal year 2020 the division only generated 13.1 billion US dollars and posted a loss of 5.61 billion had, but still invested billions.

So it should be exciting to follow Google’s cloud activities over the long term. So far there have only been a few projects that the group has not successfully pursued. One of them was the game streaming platform Stadia. Cloud activities received a decisive boost in early 2019 when former Oracle man Thomas Kurian was hired as Google Cloud boss. He should lead the group past Microsoft and Amazon to the top of the cloud.

Even fines billions do not slow down

The bottom line is that Alphabet is likely to remain promising as an investment – even if there are further antitrust penalties – the company’s market power in the area of ​​online advertising is simply too great.

The EU Commission imposed the last billion-dollar fine on Google in 2019. This particular case involved a violation of EU antitrust law and a fine of 1.49 billion euros. According to the Commission, the company had abused its dominant position by preventing competitors from placing advertisements on these websites through restrictive clauses in contracts with third-party websites.

As early as 2017, Google was fined billions for the preferential treatment of its price comparison service, and in 2018 for illegal practices on Android mobile devices to strengthen the dominant position of the Google search engine. Despite such penalties, Google parent company Alphabet made net profits of $ 34.3 billion and $ 40.3 billion in 2019 and 2020, respectively. That’s just “wow”.