Alphabet Stock Prediction: Strong Growth with No Signs of Stopping

Samantha Fischler is a Financial Analyst at I Know First. She is currently a candidate for her bachelor’s degree in Accounting with a Concentration in Finance at Binghamton University.

Alphabet Stock Prediction: Strong Growth with No Signs of Stopping


  • Google was bought by Alphabet in 2015 as part of its restructuring of the company
  • Alphabet’s Q2 Earnings were released on July 28 showing the company’s strong growth
  • Alphabet’s ‘Moonshot Projects’ have been costing more than the revenue they’ve been bringing in
  • Alphabet secured permission from the FAA to test drones at an FAA testing site
  • Alphabet’s Verily and GlaxoSmithKline are working together to form a bioelectronics company
  • I Know First’s algorithm is currently bullish on GOOG in the long term

Overview of the Company

Google Stock PredictionHave you ever heard someone say “Why don’t you Bing it?” No? That’s because Google is the superpower of search engines and is used worldwide. A subsidiary of Alphabet (GOOG, GOOGL), Google experiences upwards of 40,000 searches every second, as opposed to the 10,000 per day that the search engine processed back when it was established in 1998. Google also creates internet and computer software, most notably Adwords, an online advertising service. Among other innovations out of the “Googleplex,” are the likes of the operating system software for Androids, the Google Glass, and many other products.

Alphabet Stock PredictionGoogle was founded in 1998 and its IPO took place in 2004. The company was independent until 2015, when it announced restructuring of the company, a facet of which was that Google would be acquired by Alphabet, Inc. later that year. Since October 2015, the company has been led by CEO Sundar Pichai. Pichai joined the Google team in 2004 as a head of project management where he was part of the innovative team that brought the world the likes of Google Chrome, Chrome OS, and Google Drive. With an innovative mind like that leading the way, Google can only be expected to continue to grow into more of an internet and tech giant than it has already proven to be today.

Second Quarter Earnings

On July 28, 2016, Alphabet, Google’s parent company, released its second quarter financial statements for 2016 which ended on June 30. In their press release, CFO of Alphabet Ruth Porat noted that “Our terrific second quarter results, with 21% revenue growth year on year, and 25% on a constant currency basis reflect the successful investments we’ve made over many years in rapidly expanding areas such as mobile and video. We continue to invest responsibly in support of our many compelling opportunities.” While analysts expected a revenue of $20.76 billion, Google’s revenue surpassed expectations and increased to $21.5 billion, up 6% from the first quarter. Additionally, diluted EPS for both common and preferred stock was $7.00.

Year-over-year, Google improved in many different segments, as the financial statements report. Google’s revenues from advertising increased by 19% from Q2 2015. This was due to more searches on phones. Paid clicks on Google’s website increased by 37% over the last year as well. However, it is important to note that the cost per click, meaning how much Google charges a company for every click on an ad, decreased as well. Alphabet’s “Other Bets” revenues were up to $185 million, a significant increase from last year’s mere $74 million. “Other Bets” includes other Alphabet products and subsidiaries such as Nest, Verily (formerly Google Life Sciences), and Google X, to name a few. Alphabet’s ‘Moonshot Projects’ took another hit last quarter with $859 million in losses and only $185 million in revenue.

A Shot in the Dark

Alphabet Stock PredictionAs previously mentioned, Alphabet’s ‘Moonshot Projects’ didn’t perform as well as Alphabet and investors would have hoped for. Moonshot Projects include the research products from Alphabet subsidiary, X, including self-driving cars and smart home technology to name a few. While these products are bringing in some revenue and in the future will hopefully bring in a lot of income to the company, right now the expenses heavily outweigh the revenue that’s brought in. The earnings call mentioned that Alphabet’s Fiber internet service and Nest automated home technology systems bring in most of the revenue from the “Other Bets.” Alphabet neglected to mention anything about Google’s self-driving cars and when they are projected to be sold commercially.

Alphabet Stock PredictionUnfortunately, this is the second consecutive quarter that Alphabet has lost money due to its “other bets” projects. Alphabet has promised investors that the company will try to lower expenses for other bets, cutting projects that it sees as less realistic and profitable. This is similar to when Alphabet stopped production of the Google Glass due to slow sales after the initial hype died down.

Racing Drones

Alphabet has been in the race for some time with Amazon to deliver packages to customers not by UPS or FedEx, but by drone. Amazon announced on July 26th that it would start testing its drones in the UK. Alphabet recently secured a green light from the White House to test its drones in the United States so that the company can implement them into their delivery services in the near term. Alphabet has named this project ‘Project Wing’ and is expecting that their delivery service using drones will take off by 2020. Alphabet’s research arm ‘X’ will be able to test their drones at one of six Federal Aviation Administration (FAA) test zones. Alphabet is working to develop small and cheap radio transponders to relay to controllers exactly where the drone is. If this technology was implemented into all drones, then they would be able to be in areas with heavy air traffic without crashing into each other.

Alphabet Stock Prediction

Google Making Waves the BioTech World

Verily, formerly Google Life Sciences, is partnering with British pharmaceutical company GlaxoSmithKline (GSK) to create a bioelectronics firm valued at $715 million called ‘Galvini Bioelectronics.’ The company will be based in the UK, but will have its second research center in San Francisco, CA. Galvani will be owned 55% by GlaxoSmithKline and 45% by Verily. The main focus of the company will be to fight diseases by targeting electrical signals in the body by using miniaturized electrical devices. Galvini Bioelectronics’ first project is set to be fighting type 2 diabetes by developing mini precision devices. Other projects that lie ahead include curing arthritis and asthma using biomedicines. In the past, larger electrical devices have been used to cure or help deal with health issues such as heart pacemakers. Galvini Bioelectronics aims to shrink down these major breakthroughs into smaller devices. To start off, Galvini Bioelectronics will employ 30 people from backgrounds of science, engineering, and clinical experience.

This merger shows Alphabet’s strong desire and aim to stretch further past the world of search engines and play a larger role in other scientific areas. Verily is already working with Swiss drugmaker Novartis to create ‘Smart Contacts’ that monitor diabetes in addition to other projects within the BioTech field.


I Know First’s algorithm has been bullish on GOOG in the past. In a 1-year outlook dated January 9, 2015, I Know First predicted that GOOG would have positive growth. As of January 9, 2016, the stock price had risen 42.13%, showing the accuracy of I Know First’s prediction.

Alphabet Stock Prediction

Alphabet and its subsidiary Google are not forces to be trifled with. The company is in a constant back and forth with Apple as the most valuable company in the world. After Alphabet’s second quarter earnings were released, the stock soared, showing remarkable growth that is atypical for a mega-cap company. With Alphabet continuing to take on the BioTech industry and continuing development on its drone delivery, the company is sure to keep turning profits and show continued growth as has come to be expected at this point.

Alphabet Stock Prediction

I Know First’s algorithm forecasts how stocks are going to perform for 3 days, 1 month, 3 months, and a year. In the case of Alphabet (GOOG), the middle row represents the signal strength and the bottom number represents the predictability indicator, the historical correlation which is heavily weighted on the algorithm’s recent predictions. To learn more about how I Know First’s algorithm operates, click here.