Most predictions about the distant future should be taken with a grain of salt. This one is no different.
Still, given what we know about Alphabet (GOOG +0.41%) (GOOGL +0.66%) and its corporate culture, this educated guess is more likely than not to be on target: A $10,000 investment in Google’s parent company today will likely be worth around $67,000 in 20 years’ time. Here’s why.
So much going for it
It seems like an outrageous number, but it’s actually pretty conservative. Thanks to compounding, a market-average return of only 10% per year does the trick. This conservative outlook also allows for some headwinds that its eventual sheer size could cause, although such caution may or may not be merited.
Image source: Getty Images.
The growth drivers are the same either way. That’s the fact that its breadwinning search engine still handles 90% of the world’s web searches, according to estimates from Statcounter, while its rapidly growing cloud computing arm has become a major cash cow in its own right. This business segment turned $20 billion in revenue (up 63%) into $6.6 billion in operating income last quarter alone, accounting for 16.6% of Alphabet’s total operating bottom line for the three months ending in April. Precedence Research believes this market is going to grow by more than 20% per year through 2034.
Then there are the initiatives that aren’t paying off yet but soon will. This includes the ongoing refinement of its AI-powered chatbot Gemini, as well as its Waymo robotaxis. Although it still has much less reach than OpenAI’s ChatGPT, Statcounter reports Gemini is slowly chipping away at ChatGPT’s dominance. Apple even recently tapped Google to help bolster its struggling artificial intelligence (AI) efforts.
As for Waymo, few may realize it, but a small-scale commercial test of its autonomous driving tech is underway right now. It’s going to be ready for a wide-scale launch sooner than you might think, putting it within a business Goldman Sachs believes will be worth $400 billion per year by 2035.
Then there’s the work that’s promising even if the end zone and prize aren’t yet perfectly clear. Chief among these projects is quantum computing. It’s not the only name working on making this science accessible to the masses. It is the name best equipped to support the developmental work still needed and then make it accessible via the cloud.
Today’s Change
(0.66%) $2.62
Current Price
$400.61
Key Data Points
Market Cap
$4.9T
Day’s Range
$396.37 – $402.00
52wk Range
$156.16 – $402.00
Volume
994K
Avg Vol
30M
Gross Margin
60.43%
Dividend Yield
0.21%
Alphabet is built to evolve
These profit centers are obviously compelling growth drivers. But they’re not the crux of the reason Alphabet shares could gain at least 470% between now and 2046, however.
What truly makes this company a high-performing investment opportunity is a corporate culture that allows for the development of new projects like quantum computing, Waymo, cloud computing, and/or a willingness to make acquisitions like YouTube and mobile operating system Android (which is installed on more than two-thirds of the world’s mobile devices). This entrepreneurial ethos is still well intact.
It also means we don’t really know what Alphabet is going to look like in 2046, since it’s sure to evolve in the meantime. All we can confidently count on is the likelihood that the next 20 years will be as fruitful as the past 20 have been.
