The company name Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) isn't as frequently mentioned and familiar as its core business unit, Google. But I think it might be appropriate for a business that, in contrast to what many might think of it, is rapidly becoming so much more than its foundational internet search business.
That diversification into a variety of different activities is what's going to put the company in high-growth mode over the coming half-decade, in my view. Read on for why.
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Image source: Getty Images and Alphabet.
Searching for new revenue sources
Years ago, what's now Alphabet could have easily rested on its laurels and continued to rake in buckets of money with search. It's a high-margin, relatively low-cost activity that will always attract valuable advertising dollars. After all, who doesn't want to place spots on Google's portal, which seems set to be the incumbent search engine for the imaginable future?
So it's admirable that Alphabet management has been restless enough to plow into other revenue streams. There's advertising magnet YouTube, of course, which has been a valuable asset for the company since it bought it almost 20 years ago (believe it or not).
Another cash generator is the company's Google Cloud business; this is a well-established, robustly growing service that's trusted by many clients to keep selected digital assets in the ether.
Driven to succeed
More encouragingly, Alphabet has one foot firmly in the future.
I'm thinking in particular of its Waymo self-driving unit, which in selected cities -- like mine, Los Angeles -- is rapidly becoming a common sight. In this respect, Alphabet is miles ahead (sorry) of anyone else, even the persistently beloved Tesla. Waymo has vast potential to be this country's go-to robotaxi service, and is firmly establishing itself as a reliable first mover.
With its various revenue streams, Alphabet seems almost assured to grow vigorously over the next few years. I think its stock will prove to be quite the rocket by 2030.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.