Some of the most interesting aspects of digital advertising giant Google live outside its vast ads market. Parent company Alphabet is putting more money into cloud services. High net income growth and positive forecasts suggest they are about to receive an extra boost.
Advertising remains by far the biggest business, accounting for 81 per cent of group revenues. These beat estimates in the final quarter of 2021, rising 32 per cent to $75bn. But the business is not valued as highly as its trillion dollar-plus peers. Alphabet’s enterprise value is equal to 14 times forecast ebitda — lower than Apple and Microsoft.
There may be some uncertainty about how successful Alphabet will be in diversifying its revenue streams. Google Cloud Platform’s revenues of $5.5bn were up 45 per cent on the previous year. But it still accounts for just 7 per cent of the total. Amazon and Microsoft dominate the market. Google is still at investment phase. The unit remains lossmaking.