Is Google a Good Investment?

What Is Google?

Alphabet Inc.—better known by its former name, Google Inc.—is a technology conglomerate that oversees a number of businesses, including the world’s largest internet search and advertising service, the popular streaming video website YouTube, the Android mobile operating system, cloud storage services, and various other growth ventures. It was launched as Google’s holding company in 2015, when the company changed its slogan from “Don’t be evil” to “Do the right thing.”

Google is one of the most successful stocks of the 21st century, launching at just over $50 a share in August 2004. Despite its non-dividend paying status, investors of all stripes have flocked to Google.

What are some things investors should know before deciding whether to go for Google?

What You Need to Know

• Sergey Brin and Larry Page founded Google, a search engine company, in 1998.
• In 2015, Google became a subsidiary of a holding company, Alphabet.
• The California-based company processes billions of search requests each day.
• Although the firm has venture interests in a wide array of internet-based fields, including email, social media, video, analytics, robotics, and many other areas, internet search remains the primary driver of its sales and earnings.

Share Types

There are two ticker symbols for Google on the NASDAQ.

1. Google’s A shares: GOOGL
2. Google’s C shares: GOOG

Google’s co-founders, the company chair, and a few other directors own the firm’s B shares, which do not trade publicly.

Google split its stock in April 2014, creating A and C shares. The split doubled Google’s number of shares and cut the price in half. But the important difference is that holder of A share GOOGL get one vote per share, and C shareholders get no votes. B shareholders get 10 votes per share, meaning they hold most of Google’s voting power. Google’s A shares have frequently traded at a small premium to its C shares, showing the market does place some value on voting power.

The bottom line is Google allows investors to buy large shares of its equity but relinquishes little control.

Investors interested in Google who want to vote at its stockholder meetings should aim for the A shares.

Google’s Formidable Moat

Stocks that have an enduring competitive advantage are safe investments and have moats. Examples of moat industries include cable companies, given the massive costs of building new wiring infrastructure, or Coca-Cola, which has an iconic name among consumers.

Google certainly has a moat. This is particularly impressive given the rate of change and intense competition on the web, whose flat structure means anyone can build a competing service. However, Google has been able to gain and maintain dominance by delivering better results at faster speeds than its competitors.

Further, it has been able to consolidate its market share with its Chrome browser and Android operating system, and it pays Apple to be the default search engine on Apple mobile devices.

Billions of Searches

Over 3.5 billion searches are made on Google every day. Each search generates a tiny bit of revenue for Google as the company sells ads against these results. Google has 75% of the internet search market and 85% of the mobile search market. Additionally, search on the internet continues to grow as it becomes a more integral part of peoples’ daily lives on a global basis.

A massive profit driver for the company, this is the main ingredient in making Google a safe investment. Nearly 90% of Google’s earnings and revenues come from search. These profits and revenues fund the projects Google hopes become future profit centers. It allows the company to take on massive risks that other companies could not even consider.

Additionally, search has given Google a massive war chest and borrowing capacity that allows it to buy out any competitor before it becomes a serious threat. The ubiquity of its search product also ensures it continually evolves its algorithm to deliver better results for users. The more people who use Google search, the more data is collected.

Due to these advantages, Google is in a much better spot than its smaller competitors and is able to withstand competition and stress from economic weakness. And it has a history of doing so.

Thriving in Tough Conditions

The Great Recession in 2007-2008 was a massive stress test that many companies failed. Like all stocks, Google was also badly damaged by the selling pressure, falling 65% from its high at the tail end of 2007 to early 2009. However, once the stock market recovered and the economy began to show signs of growth, the company recovered all its losses in just three years. More importantly, even while the economy weakened over this time period, Google maintained growth in revenues.

With Google’s competitive advantage and cash reserves, it has a beta of 1.03, which is significantly less than its smaller competitors that have a beta of 1.6 on average. Additionally, during the Great Recession, many of its competitors were unable to survive, with others falling to the brink of bankruptcy.

Regulatory Risks

This is not to say that Google doesn’t face challenges. One is the risk of government regulation. However, in January 2025, a federal appeals court struck a final blow against net neutrality, the Federal Communications Commission’s (FCC) policy first instated under the Obama administration. After years of back-and-forth, a court sided with a trade group representing internet service providers (ISPs). This is good news for Google, as it has installed more than 100,000 miles of ISP fiber worldwide. The firm is a major contributor to the internet infrastructure.

Though net neutrality advocates lost the battle in the U.S., the story is different elsewhere in the world. In 2015-16, the European Union brought charges against Google for manipulating search results to promote its own shopping sites. In September 2024, Google lost its appeal, as the Court of Justice of the European Union upheld its €2.4 billion fine.

Similar charges were levied by the Competition Commission of India in 2015, which accused Google of “abusing its dominant position to rig search outcomes.” In 2023 a tribunal upheld a fine of $160 million on the company.

Underwhelming Diversification

If a company grows large enough, it runs into problems of scale. Larger companies have to deal with enormous infrastructure, compliance requirements, staffing headaches, and relative inflexibility compared to their competitors. Google may find itself unable to generate more and more revenue through traditional means consistently, which translates into dwindling multiples for investors.

Brin and CEO Larry Page had previously warned Google shareholders that the company wanted to be unconventional. Short-term earnings wouldn’t always be the focus, they said, because the potential for future innovation was just too exciting. It’s a great sentiment for consumers, but it raises alarms for investors.

Shareholders may see returns stagnate if Google focuses on unproven, lower-returning ventures and less on generating efficient revenue. There’s a possibility that Google could strike it big with a groundbreaking product or two, but there’s always the chance that it won’t.

So far, Google’s more down-to-Earth attempts at diversification have yielded modest results at best. Google+ was supposed to be an exciting answer to Facebook and LinkedIn; instead, Google+ has hundreds of millions of members and very little activity. Google Glass has not performed any better.

Mobile Apps Replacing Search Engines

In terms of mobile access, Google lags behind its competitors. Apple generates a ton of revenue through mobile apps, which is the right space to be in when consumers are increasingly on mobile devices.

Traditional search engines (i.e., the web browser) generate the bulk of ad revenue for Google. Every time a mobile user clicks on an app rather than using a search engine, Google’s advertisers lose potential access. Smartphones don’t have to go through Google.com to shop, travel or find restaurants. Google used to be the gatekeeper, but now there’s a big new door for mobile users to travel through.

Google can compete in the mobile access arena, but it doesn’t have the same overwhelming advantage against Apple and Facebook that it enjoyed over Yahoo or Bing. Google shareholders will eventually feel this squeeze unless the company can bring in other kinds of income.

Broader Market Risks

Every stock faces certain kinds of risk, albeit in different ways. In the long term, Google faces the same broader risks as all technology companies. The NASDAQ has plummeted before, and there’s no law that tech bubbles can’t form—and burst. If interest rates go up and investors spook, the technology sector may prove to be soft.

Who Founded Google?

Sergey Brin and Larry Page founded Google.

When Was Google Founded?

Google was founded in 1998.

When Was Alphabet Formed?

Alphabet, Google’s holding company, was founded in 2015.

The Bottom Line

Rosy as its performance has been, Google has had its share of missteps since going public. The company faces serious challenges moving forward, most of which center around its size and industry dominance. Among these challenges are a need to diversify revenue sources and avoid costly regulations from domestic and international governments. Nevertheless, the stock remains a safe investment due to the dominance of its search business and massive cash holdings.