In 2022, technology stocks have taken a beating, with the world’s largest corporations losing investor faith as inflation continues to climb and consumer spending falls. Alphabet stock (NASDAQ:GOOGL) has been hit, with its stock down 34% year to date.
A Green Flag Indicates Its Market Strength.
Alphabet is home to mammoth brands like Android, Chrome, YouTube, Google, and all of its search-related services.
Although advertising rivals such as Meta Platform’s Facebook and Amazon are on the hunt, experts estimate Alphabet will maintain its market leadership until at least 2023.
Furthermore, YouTube’s 2.6 billion monthly viewers and increased ad income have shown that video is an increasingly successful means of reaching customers. The video platform’s ad income climbed by 25% between 2020 and 2021 and will continue to rise in 2022. It increased by 9.2% year on year in the first two quarters of 2022.
Investors have become tired of Alphabet since worldwide ad expenditure decreased by 3.3% in August, the third month in a row. The drop in demand is alarming since, when combining Google and YouTube’s advertising profits, advertisements accounted for 92.8% of the company’s income in the second quarter of 2022. Rising prices have forced firms to reduce their advertising expenditures; nevertheless, all is not lost. According to Insider Intelligence, digital ad expenditure in the United States is predicted to climb 31% from $239.89 billion in 2022 to $315.52 billion in 2025.
Furthermore, many businesses, such as video streaming platforms, use advertisements to complement a lower membership price. If a recession occurs, other firms may follow suit in order to provide competitive pricing and rely on Alphabet’s Google Network to display advertisements on their platforms.
Its Increasing Product Cemetery is a Red Signal.
As one of the world’s most inventive firms, Alphabet has introduced hundreds of services and products, not all of which have been as successful as Google. Consequently, the corporation has a growing cemetery of items that it debuted and subsequently discontinued when it failed.
After debuting in November 2019, Google Stadia became the company’s latest program to be axed on October 1. The platform saw the corporation go into games, with Stadia being a cloud-gaming service that consumers could access from anywhere and on practically any device for a monthly fee.
Is Alphabet Stock a Good Investment?
The corporation concluded the second quarter with total assets of $355.2 billion and liabilities of $99.8 billion. The free cash flow was $12.6 billion.
Alphabet stock (NASDAQ:GOOGL) has good financials, and its price-to-earnings ratio is at an all-time low, indicating that the firm is in better shape than its stock (NASDAQ:GOOGL) price suggests. Earnings may fall during a recession, but Alphabet’s dominating market position in digital advertising and the potency of its services demonstrates that it is still a solid long-term investment.
Featured Image- Unsplash @ Suzy Brooks
Author Okoro Chinedu 
