Why Alphabet Was 2021’s Best-performing Big Tech Stock

Published on 27 Dec 2021

Alphabet is on the cusp of completing its finest year in terms of investment performance since 2009 and has established itself as the year's best-performing Big Tech company.

Alphabet's stock has up 68 percent this year as of Thursday's closing of $2938.33. With only five trading days remaining in 2021, any of its largest counterparts will find it almost hard to catch up.

Microsoft is the closest competitor, up 51%. Apple gained 33%, Facebook (now Meta) gained 23%, and Amazon climbed 5%. You might even include Tesla, which is up 51% year to date. The Nasdaq 100, a bundle of the Nasdaq's biggest non-financial businesses, is in the midst, up 27%.

Alphabet, which derives the overwhelming bulk of its income from Google's advertising business, has shown resilience during the Covid epidemic and resiliency in the face of the new wave of inflationary fears. Consumers have flocked to online and mobile search, navigation, and YouTube videos in larger numbers, and Google's booming cloud infrastructure section has benefited from the boom in remote work.

Alphabet reported a 43 percent gain in advertising income to $53.1 billion in its third-quarter results released in October, as well as a comparable increase in YouTube advertising sales to $7.2 billion. Earnings exceeded analyst expectations.

See also: Best Buy acquires U.K. Company Current Health

Beating Privacy Terms & COVID-19

While some other ad-based internet firms such as Facebook and Snap have been pulled down by Apple's iOS privacy measures, Google has fared better, in part due to its dominance over the Android os and independence from Apple.

Revenue is predicted to increase 39% to $254 billion for the entire year, according to the overall analyst forecast in a Refinitiv poll. That would be the greatest growth rate since 2007 and after a year of just 13% growth, as the Google company anticipated a temporary revenue decline in the second half of 2020 for the first time.

Google's search business resumed increasing at pre-pandemic levels in early 2021, partly to a comeback in advertising. Countries reopened, and consumers increased their search for items and vacation choices while spending more time on YouTube, which grew at the fastest rate of any social network site among American users throughout the epidemic, as per the Pew Research Center.

"Alphabet's comeback from the COVID-19-induced advertising drop in 2Q20 has been impressive," analysts at Argus noted in a late October research. The company has a buy recommendation and said, "We anticipate further growth in the coming months as e-commerce as well as digital marketing have exploded in recent years as a result of the economic recovery."

Google last outperformed Wall Street 12 years ago, when the stock more than quadrupled in value. Google was a significantly smaller corporation back then, and it would not reach $1 trillion in market capitalization until January 2020.

Alphabet gained over another trillion dollars less than two years after surpassing that milestone, peaking just short of $2 trillion in mid-November. As of last week's closure, its market capitalization was $1.95 trillion.

Featured image: Alphabet

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