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Alphabet Inc Class A GOOGL

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Connected TV Advertising Best Purchased and Seen on YouTube; Raising Alphabet FVE to $3,470

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

After taking a closer look at the connected television advertising market, we believe Google's YouTube will be one of the main beneficiaries in this fast-growing business. With a strong network effect driving overall YouTube user growth and a growing percentage of them consuming content on connected TVs, we expect YouTube to attract more advertisers and command higher prices over time.

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Company Profile

Business Description

Alphabet is a holding company, with Google, the Internet media giant, as a wholly owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google’s other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone, and smart homes products, which include Nest and Google Home, also contribute to other revenue. Alphabet’s moonshot investments are in its other bets segment, where it bets on technology to enhance health (Verily), faster Internet access to homes (Google Fiber), self-driving cars (Waymo), and more. Alphabet’s operating margin has been 25%-30%, with Google at 30% and other bets operating at a loss.

Contact
1600 Amphitheatre Parkway
Mountain View, CA, 94043
T +1 650 253-0000
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 150,028

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