Alphabet Stock Vs Google Stock?

Alphabet Stock vs Google Stock: Google might have started as a basic search engine when it launched in 1997, but it has evolved into a tool that most internet users consider essential to their digital lifestyle. That was made abundantly clear in 2006 when the word “Google” was added to the Oxford English Dictionary. 

Google holds more than 85 percent of the global internet search market, and its competitors are so far behind that they can hardly be considered true contenders. Since Google’s 2004 IPO, shares have increased an average of 24.8 percent per year, and the company is currently valued at more than $1.5 trillion. 

Wait. That can’t be right – aren’t the $1 trillion companies Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOG)? Google isn’t on that list. 

It’s true, Google still trades under the same ticker symbols it always has – GOOGL and GOOG – but effective October 2, 2015, there was an important change. Instead of being a standalone company, Google restructured its business. As of that date, Google – the search engine – became a subsidiary of the newly introduced Alphabet holding company. 

Now when you buy GOOGL or GOOG, you aren’t just buying Google. You are buying Alphabet, which includes Google, as well as a long list of additional businesses. 

What Is Alphabet Stock?

As Google began to expand into new types of technology, founders Larry Page and Sergey Brin started thinking about the fact that Google was no longer purely operating in the search engine and internet services space. It had subsidiaries like Calico, Nest, X Development, and Verily – all promising innovators in the world of advanced technology, but none especially aligned with Google’s original mission. 

The reorganization created an umbrella company to hold the many businesses that once rolled up to Google directly. Under the new structure, Alphabet became parent to Google and each of the other companies. That made management of Google much easier. It could return to its roots as a search engine while other Alphabet subsidiaries pursued Artificial Intelligence (AI), healthcare applications, wearable fitness devices, urban innovation, and autonomous vehicles – to name a few. 

Alphabet stock is the combination of those businesses, all rolled into one. Many investors appreciate the opportunity to add untested tech businesses to their portfolio through the purchase of Alphabet because Google’s strength mitigates the risk of emerging technologies. That makes Alphabet a safer choice than unproven tech startups. 

Is Google Stock Different From Alphabet?

Alphabet didn’t give up its branded ticker symbols GOOG and GOOGL. It still trades under those symbols today. But now, when you buy GOOG and GOOGL, you are getting more than a search engine.

You are getting a $1.5 trillion conglomerate of cutting-edge tech businesses. In other words, Alphabet stock includes Google, but despite the ticker symbol, there is no way to buy standalone Google stock. 

GOOG vs. GOOGL: Which Is Best?

One of the Alphabet vs Google mysteries that still remains is the double listing on the Nasdaq exchange. If GOOG vs. GOOGL isn’t related to Alphabet vs Google, what is the difference between the two? More importantly, in a choice between GOOG vs GOOGL, which is best? 

In April 2014 (pre-Alphabet), Google created two classes of shares: GOOG and GOOGL. The company’s founders had become concerned with losing control of their business due to the sheer volume of shares issued and the massive investor interest in the company.

The two types of shares worked to prevent a situation in which shareholders had too much power – a situation that can lead to an excessive focus on short-term results to the detriment of achieving long-term goals. 

GOOGL shares are considered “Class A”, which is usually referred to as common stock. GOOGL shareholders have voting rights – the standard one share = one vote. GOOG shares, on the other hand, are considered “Class C”. They do not offer any voting rights to their owners. 

It’s worth noting that Alphabet does have another set of shares that fall into a “Class B” category. These are not available for public trading. They are held exclusively by the founders and select insiders, and they carry ten votes per share. 

That leaves the question: GOOG vs GOOGL, which is best? The answer comes down to the importance you place on having voting rights. GOOG shares are often – though not always – slightly less expensive than GOOGL. In theory, the market supports a small premium for voting rights. 

If you don’t have any interest in voting or you can’t possibly own enough of the company for your vote to impact decisions, the less expensive stock gets you the same exposure to Alphabet and Google’s growth as the more expensive shares. 

Is Alphabet Stock A Good Buy?

Alphabet stock has outperformed the S&P 500 for years, and there is no end to its growth in sight. It keeps climbing quarter after quarter, and it continues to outperform analysts’ expectations almost every time. 

The first 2021 earnings report was impressive, even to the most optimistic of market experts. Revenue increased by 34 percent year-over-year, and operating income doubled. In addition to Google’s strong performance, other divisions had a great quarter. YouTube increased sales by 50 percent year-over-year, and cloud computing sales went up by 46 percent.

All of that good news boosted Alphabet stock prices, but that doesn’t mean newcomers are too late to realize returns. All signs indicate that the company will continue its winning streak long-term, so Alphabet stock is a good buy. 

How High Could Alphabet Stock Go?

One of the most exciting things about Alphabet’s current growth and subsequent returns for shareholders is that it doesn’t reflect the true size and scope of the company’s revenue potential. Remember, Alphabet owns a number of early-stage tech businesses that are not yet turning a profit. That means Google’s success is currently supporting those losses. Eventually, those ventures could become profitable – or Alphabet will shutter them and move on. In either case, that will send Alphabet’s bottom line results straight up. 

How high could Alphabet stock go? No one dares to guess at an upper limit. Under current conditions, there is no reason to believe that there is any ceiling to Alphabet’s growth. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.