Alphabet (GOOG) stock, explained like you're 5

Is Alphabet a small, medium or large cap company?

Yes. Alphabet is a large cap stock, and an extra big one: it is a mega cap, worth more than 200 billion dollars. Its market cap, which is the total value of all its shares, is about 4.25 trillion dollars.

Here is how you can tell. Multiply the share price by the number of shares to get the market cap, then compare it to the usual sizes. Micro cap is under 300 million dollars, small cap is 300 million to 2 billion, mid cap is 2 to 10 billion, large cap is 10 billion and up, and mega cap is over 200 billion. Market caps move every day with the share price, so treat the number as a recent snapshot.

How Alphabet makes money

• Google Search and advertising: businesses pay to show ads alongside Google Search results, on YouTube, and across the web via Google's ad network.
• Google Cloud: companies pay a recurring fee to use Google's servers, AI tools, cybersecurity services, and the Google Workspace suite of apps like Docs, Meet and Drive.
• YouTube subscriptions and app sales: revenue comes from YouTube Premium subscriptions, as well as app purchases and in app spending through the Google Play store.
• Hardware and other services: Alphabet sells physical devices and earns from consumer subscriptions tied to YouTube services.

What moves GOOG stock

• Digital advertising spend: because most of Alphabet's revenue comes from ads, any slowdown in what businesses spend on advertising hits the stock hard and fast.
• Google Cloud growth: investors watch Cloud revenue closely as it is the fastest growing segment and signals how well Alphabet competes with Amazon and Microsoft in enterprise computing.
• AI developments: new AI features in Search, Workspace or Cloud can lift the stock, while concerns about rival AI products threatening Google Search tend to push it down.
• Regulatory and legal news: Alphabet faces antitrust cases in the US and Europe related to its dominance in Search and advertising, and major rulings can move the stock significantly.

Good to know about Alphabet

• Alphabet was founded in 1998 and has grown into one of the largest companies on Earth, with a market value above four trillion dollars.
• It employs more than 190,000 people worldwide and is headquartered in Mountain View, California.
• Alphabet only recently began paying a dividend, so for most of its history it returned no cash directly to shareholders.
• The stock has a beta of about 1.2, meaning it tends to move a little more sharply than the broader market, both up and down. Beta measures how volatile a stock is relative to the market overall.

In the news lately

• Can Alphabet Stock Double By 2030? (Yahoo Finance)
• 1 Analyst Thinks Alphabet Stock Could Jump 20% on AI Chip Demand. Is He Right? (The Motley Fool)
• Alphabet Stock Can Soar 22%, J.P. Morgan Says. Why Google Can Defy AI Fears. (Barron's)
• Prediction: Alphabet Stock Could Be Worth $700 by 2030 (24/7 Wall St.)
• (GOOG) Pivots Trading Plans and Risk Controls (GOOG:CA) (Stock Traders Daily)

Key terms to know before you follow GOOG

• Market cap
• P/E ratio
• EPS (earnings per share)
• Earnings report
• Volatility