Better Buy: Amazon.com vs. Google
Amazon (NASDAQ: AMZN) and Google's parent company Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) are two of the world's leading technology juggernauts. Amazon started as an online bookseller and has since expanded into the "everything store," leads the public cloud, e-book, and smart-speaker markets, and has emerging businesses in healthcare, global shipping, physical retail, and other areas. Google began with a clearly superior search product, expanded to dominate internet advertising globally, acquired DoubleClick, Android, and YouTube for what now seems like pocket change, and has the pole position in autonomous car technology. So which of these technology investments is the better buy today?
Alphabet's Google is hands-down one of the best businesses in the world. Its search business has dominant market shares in most countries globally. Many years ago, Microsoft's (NASDAQ: MSFT) Bing spent billions trying to put a dent in Google's search market share, to no avail. Google's moat is wide and the business has fantastic underlying characteristics. The company has used the prodigious cash flows generated from search and advertising to invest heavily in all sorts of diverse areas -- mapping the entire world down to the street, scanning every book in the world, leading autonomous car advancements, bringing internet access to underserved parts of the world via a network of balloons near the edge of space, leading cutting-edge artificial intelligence and machine-learning technologies, and even researching eternal life. Some of these bold bets may fail, but it seems likely that at least some of them will pay off in a big way over the long term.
The company's core revenue stream, Google advertising, generated $130 billion of revenue over the last 12 months. For context, the global advertising market is estimated by the World Advertising and Research Center to be $618 billion last year and $656 billion next year. That means Google commands something around 21% of the global advertising market, which itself is projected to grow at a 6.4% annual rate over the next 10 years. That's part of why I think Alphabet is an attractive investment, especially now that the company just tied CEO Sundar Pichai's incentive compensation to the total shareholder return of Alphabet's stock over the next two to three years.
Source Fool.com
