"First, note that this feat wouldn't require Alphabet to produce extraordinary returns. The company's current market cap is $3.7 trillion. To reach $6 trillion in four years, it needs a compound annual growth rate of 12.85%. That is above the market's long-term average, but it isn't an unreasonable target, either. Second, we can point to Alphabet's momentum. The company's core advertising business remains strong and has been improved thanks to artificial intelligence (AI) initiatives."
"The company's core advertising business remains strong and has been improved thanks to artificial intelligence (AI) initiatives. It has increased engagement on Google Search through features like AI Mode and AI Overviews, and has done likewise on YouTube through AI-powered recommendation algorithms. This has helped grow ad revenue. In the fourth quarter, ad sales jumped by 18% year over year to $113.8 billion, a strong performance for the tech leader."
"Third, we can look at the company's most important growth driver, its cloud business. During the fourth quarter, cloud revenue soared 47.8% year over year. Its AI services are playing a prominent role here, and demand remains high. Alphabet ended the period with a cloud backlog of $247 billion, increasing 55% sequentially and by more than 100% year over year."
Alphabet's current market capitalization is $3.7 trillion, and achieving a $6 trillion valuation in four years requires a 12.85% compound annual growth rate. The core advertising business has strengthened through AI initiatives that boost engagement on Google Search via AI Mode and AI Overviews, and on YouTube through AI-powered recommendation algorithms. Fourth-quarter ad sales rose 18% year over year to $113.8 billion. The cloud division grew 47.8% year over year, supported by AI services, and ended the period with a $247 billion backlog, up 55% sequentially and over 100% year over year. Rising capital expenditures present investor concerns.
Read at The Motley Fool
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