@sherryjas437 Why? Microsoft has less revenue. Microsoft has less profit. Microsoft growth rate is far slower. Microsoft FCF growth over the last 3 years is a faction of the growth rate for Google.
Google FCF rate in the last three years is 36%, 38% and 56%.
But then the biggest. Google is far cheaper than Microsoft.
But that is not really the biggest reason why Google is the better investment. The biggest reason is the massive runway that Google enjoyes. Built on all their assets that they have yet fully moentized. Look at Android. The most popular operating system in the world with over a billion new devices activated a year and Google does not charge a cent. Just a few dollars per device adds billions to the bottom line as no new material expense.
@bea1271 Really interesting read. As someone who's long Google, it's nice to hear perspectives out there.
I do think you aren't thinking about Google's advertising competitors in a full picture though.
Bing is their main "search engine" competition, but Amazon is much greater competition when it comes to "search". More and more searches are beginning on Amazon. TikTok, Instagram, Twitch, CTV are all competitors for YouTube as well. Where consumers "scroll" and view content, can be considered competition.
Competition in it’s most relevant business is almost irrelevant for it’s earnings power and market position as most major players (Microsoft with Bing, Yahoo) have failed to attack it.
@odonnell619 That's true. I still consider Google to thrive with small companies opening their own online stores which was also the reason to chose the CAGR of the ecommerce industry for the projected growth of it's advertisment business
@cosmictraveller While outdated as far as search trends go, this eMarketer study said 53% of PRODUCT searches begin on Amazon (I suspect that number grew since this came out).
When it comes to shopping, Amazon leads the way in "search". Amazon advertising is growing incredibly fast, and most of that is driven by their Sponsored Product search placements and growing Amazon traffic.
Bing isn't a serious contender, no. It has it's place (skews much older), but overall isn't a serious threat nor will it be.
@odonnell619 I work in advertising and I can tell you that for any medium sized campaign and above (think few hundred thousand and above) we will always run Youtube preroll and ads on Tiktok, Instagram because they serve different purposes.
@joyjoy66 I’ve spend my career in advertising at an agency, consulting company, and an e-commerce tech company. I’ve worked with small brands that only have a few hundred a day in spend, and also helped advise on global companies with $100M plus in ad spend a year.
Yes, you’re right they do serve different purposes. That doesn’t mean they’re not competition. Any place that you can place your ad dollars that isn’t Google, is competition.
Google is still growing their piece of the pie with money coming from traditional, but so is tik tok, Amazon, facebook, etc. they’re all competing for ad dollars as well as user time.
@bea1271 My biggest question is why discount it at 8%? It’s not like the 10 year treasury is yielding 8% and inflation won’t be 8% a year for the next 10 years either
@mikedsjr Google is a risky asset and therefore you would require a much greater return than you would with a treasury. The particulars depend on the capital structure of the firm, its beta, and its creditworthiness.
