Alphabet Remains at Top of Digital Ad Market
The Google parent has a better than expected second quarter, and we see shares as fairly valued today.
Alphabet’s core business, Google’s advertising, keeps growing at double-digit rates as Google's gross advertising revenue marched higher 18% year over year, helped by the continuing momentum of the digital ad transition onto mobile devices, which has lasted longer than we expected. Online video ads are also providing overall digital advertising growth an additional push, from which Google’s YouTube is an obvious beneficiary, especially with the bumper ads which are shorter and are more likely to be endured by YouTube content viewers. In our view, other factors such as the 1.5 billion monthly viewers on YouTube, the 60-minute average time they spend consuming the content on mobile devices, and as management stated, the increasing portion of viewers’ watch time on larger screens, will help Google attract more video ad dollars.
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