Google-parent Alphabet (GOOGL) stock popped 1.4% Thursday and hit a buy point and a record high, as one analyst said the internet giant might have a bigger total addressable market (TAM) than pundits think.
Thursday's gain came in above-averagevolume, but Alphabet stockcleared an 813.98 flat-base buy point, closing at 815.95 after rising as high as 819.06. Shares have risen more than 20% since June, boosted by a solid Q2 earnings report in July.
Google gets about 95% of revenue from digital advertising. Google and Facebook (FB) dominate the digital advertising market.
Ad dollars have been flowing to digital media from TV, notes Michael Nathanson, an analyst at MoffettNathanson, in a research report Thursday. But that doesn't account for all of Google's ad growth, he says. Nathanson says Google also is grabbing marketing dollars otherwise spent on public relations, telemarketing, sales promotion and sales events.
Google has a "much larger growth runway" that most TAM estimates, Nathanson said.
IBD'S TAKE:Shares in Google jumped after its Q2 earnings and revenue beat but have been in a trading range since then. Google stock has lagged Amazon.com and Facebook in 2016. Amazon and Facebook are IBD Leaderboard stocks.
Google's TAM in the U.S. is $382 billion, twice as large as media, if it includes "marketing services," said Nathanson in his report. That figure includes a bucket of $231 billion of U.S. marketing dollars aside from advertising.
Separately, Facebook shares edged up 0.1% to 130.04, still in buy range from a 128.44 buy point. Amazon rose 2% to 805.73 to a record higher, but is not in a proper buy area.
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