This only investment is in my long-term portfolio | personal finance

(James Brunley)

No one loves searching for the next big story more than I do. But let’s face it: Too many of these companies never live up to the hype. The obvious market names usually end up being the workhorses of most portfolios.

With that as a backdrop (and while the market is in the red), here’s a closer look at one of the few names I intend to keep forever. You may also want to consider adding it to your collection of long-term holdings. That is particularly the case given that this stock not only followed the market lower from the November high, but has also led a bearish charge with its 26% drop.

that action is Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG).

Image source: Getty Images.

practically unstoppable

Older companies with their best years of growth behind them are not everyone’s cup of tea. I understand. The search engine/advertising market may be at or near its full potential, as evidenced by years of inconsistent “per click” rates. Add the fact that Amazon it now poses a threat to Alphabet’s advertising business and the bull case is further weakened. Meanwhile, Alphabet’s YouTube is also losing share to a myriad of new free streaming platforms.

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Except that Alphabet is a source of income regardless of the maturity of the Internet advertising market. Led by its advertising business, in just two quarters since 2010, the company posted lower revenue year over year, and one of those times was the second quarter of 2020, when the COVID-19 pandemic began to hit North America. Plus, it closed that break in sales just a quarter later.

Data source: Thomson Reuters. Table by author. Revenue data is in millions of dollars.

It’s not hard to see why Alphabet is such a reliable producer when it seems like it shouldn’t be: the world is staggeringly dependent on the internet, and increasingly so.

A report from data analytics firm DataReportal says there are now 4.95 billion regular internet users on the planet, up from 4.66 billion in 2021. That means there are still around 3 billion more people who could eventually get access and then use the web. And like most Internet users today, newcomers often choose Google as their search engine of choice. StatCounter from Global Stats indicates that Google represents 92% of the search market and Internet Live Stats says that they generate more than 8.5 billion web queries every day.

That is more than a business. Google is a cultural element that also happens to be a toll booth.

Some will argue that the world’s shift from desktop computers to mobile devices like smartphones works against Alphabet, and in some ways that’s true. However, Global Stats estimates that Alphabet’s Android is the operating system installed on more than 70% of the world’s mobile devices, which still gives the company significant control over how those users use their devices. In particular, Alphabet easily directs the 3 billion people who use Android to the company’s app store, Google Play, and to most of the Android-licensed smartphone makers, Google, and Google’s Chrome browser. are the default search engine and browser options, respectively.

These little things add up to make the company more than just a means to connect and then browse the entire web.

Even Alphabet’s YouTube is more than just a platform. The video repository has more than 2 billion monthly users, who collectively consume more than one billion hours of digital video every day. In fact, for 35% of YouTube users in the US, Allan Thygesen, president of Google’s Americas and Global Partners, recently explained, it’s the only video platform they tune in to. That’s pretty powerful reach, even if more free video-on-demand options like Peacock or Pluto TV are starting to eat into YouTube’s share of the ad-supported video market.

Digital platforms avoid most inflation risks

Alphabet is not the only company of its kind, mind you. I’d argue that Amazon’s super-simple shopping service is another revenue-generating lifestyle platform that consumers support without a second thought. walmart it’s equally grounded in the shopper’s psyche, and if you thought about it a bit, you’d surely find more.

However, for me, Alphabet is the stock of choice for one reason in particular. While Walmart and Amazon are struggling with high costs now and will surely face that headwind again in the future, Google, YouTube and Android are digital platforms that cost relatively little to share with the public. Advertisers and licensees ultimately foot the bill. Alphabet’s fees are simply set somewhere above the company’s costs. It’s not always great pricing power, but until the world is ready to kick its addiction to the Internet and all it has to offer, it’s always enough pricing power.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. James Brumley has positions in Alphabet (A shares). The Motley Fool holds positions and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy.

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