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Why Is Alphabet Stock So Cheap?

Why Is Alphabet Stock So Cheap?
Securities In This Article
Alphabet Inc Class C
(GOOG)

Andrew Willis: Keeping up with our regular cloud storage payments has probably become as important as maintaining our mortgages or rent payments. Year to date, however, investors have been neglecting to pay for Alphabet stock GOOG--the parent company of search engine Google--all while the company racks up gains in the fast-growing public cloud market.

We believe Google will continue to gain traction in the cloud market, with annual revenue growth expected to be 27% until 2026. Meanwhile, revenue from Google Play Stores, sales of hardware products, and non-ad YouTube segments is expected to be flat for the rest of the year. Is that why the stock's so cheap?

The market might be discounting Alphabet's advertising business, which makes up 70% of revenue. But when it's expected to grow 15% this year, to a quarter-trillion by 2023? We can't expect a typically cyclical tech stock.

For Morningstar, I’m Andrew Willis.

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About the Author

Andrew Willis

Senior Editor
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Andrew Willis is senior editor for Morningstar Canada, covering stocks, alternative assets, funds, and personal finance. He is the writer and host of two weekly stock features, including Morningstar's Stock of the Week.

Willis previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor. He has also written for Thomson Reuters and CNN.

Willis holds a bachelor's degree in business administration from Bishop's University and a master's degree in journalism from the University of Hong Kong. Follow him on Twitter @Andrew_M_Willis.

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