The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First. 

Google Stock Forecast

Summary:

• Facebook’s first enterprise SaaS product, Workplace integrated with Google’s G Suite product.
• Alphabet therefore has long-term benefits from Facebook’s ambition to become a player in Enterprise collaboration software.
• Alphabet’s Google Pixel Phones also benefit from Samsung’s global recall of its Galaxy Note 7 Android phablets.
• The Pixel Plus could be a great replacement for regular and business users who like the large display experience of the Galaxy Note 7
• GOOGL has a buy signal based on its long-term algorithmic forecast from I Know First.

Alphabet’s (GOOLG) stock has had a decent 6% six-month return. However, I am still endorsing a Buy for GOOGL and GOOG. Recent events convinced me that Alphabet has more upside potential for the next six months. First of this is Facebook’s (FB) recent release of its Enterprise collaboration/communication Software-as-a-Service product (SaaS), Workplace.

Facebook is party-owned by Microsoft (MSFT). However, Facebook opted to integrate Workplace with Google’s G Suite enterprise productivity software suite. Facebook Workplace could help Alphabet catch up with Enterprise Collaboration SaaS leaders Microsoft and Salesforce (CRM). Alphabet was the pioneer in online-based team productivity and communication. Unfortunately, its Google Apps for Work did not help Alphabet become a top 3 leader in Enterprise Collaboration SaaS.

Facebook As An Ally In Enterprise SaaS

Alphabet’s continuing inability to compete better in enterprise SaaS might change for the better soon. Facebook is Alphabet’s fierce rival in digital advertising. However, Facebook Workplace could be its unofficial ally to encourage more enterprise customers to adopt Google G Suite.

Alphabet has compelling multi-billion dollar reasons to make it big in enterprise SaaS. According to Synergy Research, global Enterprise SaaS generated quarterly revenue of $11 billion in Q2 2016 – up 33% year-over-year. Facebook’s massive popularity as a social network could translate into many companies switching from Microsoft’s primary collaboration tool SharePoint 365 to Workplace.

Facebook’s dirt-cheap $1/$2/$3 monthly plans could be a long-term threat to Microsoft SharePoint’s $5/$10/$20 monthly plans.

(Source: Facebook)

Going forward, the more corporate customers who switch to Facebook Workplace might also find it prudent to not renew their Office 365 plans because Microsoft’s suite is not compatible with Workplace. Integration and convenience issues may inspire future Facebook Workplace customers to switch to Google G Suite.

Office 365 (which is bundled with SharePoint’s $20/month plan) has greatly outpaced Google Apps For Work (old name of G Suite) in terms of enterprise adoption. Alphabet therefore needs Facebook’s popularity to help its G Suite attract more potential customers.

Facebook and Alphabet are beset with the problem of rising use of ad-blocking software on desktop computers and mobile devices. They both have compelling reasons to make it big in Enterprise SaaS. Ad-dependent firms Facebook and Alphabet has obvious problems when there are already more than 400 million mobile device users that are blocking ads.

(Source: PageFair)

Alphabet could ride on Facebook’s ambition to compete with Microsoft’s SharePoint. I expect Facebook to eventually become a top 5 provider of Collaboration software for Enterprise SaaS within the next five years.

Alphabet Also Benefits From Samsung’s Galaxy Note 7 Global Recall

Alphabet has recently released its high-end, $649+++ Pixel Android phones. I discussed that Samsung’s (SSNLF) global recall of its Galaxy Note 7 will help the iPhone sales of Apple (AAPL). I am now also insisting that Pixel sales could also benefit from Samsung’s woes over its Note 7 phablet product.

There are many enterprise users who are already too accustomed to the Android experience of the Galaxy Note. Some of them may not want to shift to Apple’s iPhone 7 Plus. Android-loving business users will likely buy Alphabet’s Google Pixel XL after they get their refund from their Galaxy Note 7.

Consumers may also like that the smaller Google Pixel phone has the best smartphone cameras today. Camera quality is now a very important selling point for high-end cameras. According to DxOMark, the Google Pixel phones have the best-rated smartphone cameras ever created. The iPhone 7 and iPhone 7 Plus have great cameras but they still lag behind Pixel’s cameras. Google Pixel phone scored a DxOMark rating of 89, the iPhone 7 only scored 86.

DxOMark is the global authority for digital cameras and mobile cameras. It’s endorsement of Google Pixel as the best camera phone could attract millions of amateur and professional photographers to buy Alphabet’s flagship phone.

Conclusion

Long-term growth investors should add GOOGL and/or GOOG to their portfolios. Alphabet is deftly diversifying its business to reduce its exposure to digital advertising. It could become a major player in Enterprise SaaS. Alphabet can also become a major rival to the high-end phone business of Apple and Samsung.

The one-year long-term algorithmic forecast for GOOGL is very positive. Going long on this stock now could prove to be profitable.

My 12-month price target for GOOGL is $930. This is lower than the average price target of $941.64 for GOOGL made by TipRanks-tracked analysts.

I Know First Past Success With GOOGL

I Know First has been bullish on GOOGL in past forecasts. On May 30th, 2016, an I Know First analyst wrote a bullish for Alphabet in accordance with our state of the art algorithm. Since then, GOOGL has been up over 10% to date.

This forecast was sent out to I Know First subscribers on May 27th, 2016. To subscribe now click here.