Are you looking to earn more? You might want to invest in the stock market. And if you want to be successful at it, you should know one of the secrets to acquire sustainable returns in the stock market – long-term investing. This is because it ignores short-term volatility. However, for stock market investors, they will tell you it is difficult to find out which companies and stocks you should invest in.
So, we are here to make things easier for you. A good company where to buy and hold stocks, take note, forever is Alphabet. Yes, the company that houses Google.
Alphabet is a significant player when talking about Internet search ad revenue. Statistics show that Alphabet earned 58 percent of the online search revenue total worldwide in 2022. This has significantly beaten the percentage made by Amazon’s ad business, at 14 percent, and the percentage earned by Microsoft’s Bing, at six percent.
Here is the news with a closer look at why you should invest in and hold Alphabet stock – forever.
The valuation is promising
For long-term stock investors, purchasing a top-notch company at a low valuation will reduce risks while maximizing returns. Alphabet stock has a forward price-to-earnings (P/E) multiple of 19, which is substantially more affordable than the S&P 500 average of 24. The valuation is, indeed, promising.
Alphabet sees artificial intelligence as an opportunity rather than a threat
At first, you might think that the rise of AI tools like ChatGPT is challenging Alphabet’s Google. Think again. Alphabet sees AI as an opportunity instead of a threat.
Nowadays, search engines let users interact with the Internet directly, as opposed to just asking questions and receiving answers. Moreover, Google utilizes machine learning technology to optimize the search results it provides to its users.
As the owner of two of the most influential platforms around, Google and YouTube, Alphabet’s capabilities on user-generated clips, comments, and search behavior give it an edge in the industry.
The company’s advertising business is cyclical
In the world of stocks, nothing is perfect too. In spite of an 18 percent rally so far this year, Alphabet stock is still down by a whopping 30 percent, emerging from its historic high of $150, achieved late in 2021. Yes, there is a slowdown, but the rest of the figures should encourage you to still invest in Alphabet stocks.
For instance, Alphabet’s first-quarter sales improved by three percent to $69.8 million. Plus, Google has an 86 percent market share in desktop Internet searches.
Not just those, Alphabet’s management is also taking advantage of the downturns to cut costs. For example, the company announced its plans to lay off 12,000 employees last January. In April, its chief financial officer also promised to cut spending on other overheads such as employee services and real estate. In other words, Alphabet is on top of everything.