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- Dividend Downfalls: Alphabet
Dividend Downfalls: Alphabet
Google stocks have gained 130% over the last five years, but went into correction in 2022 together with other Tech stocks after the Federal Reserve (Fed) announced an uncompromised battle with soaring inflation by rising interest rates. Nevertheless, Alphabet shares may experience minor losses during interest rates hiking cycle as the company has a strong net cash flow, diversified business, and a large buyback program.
Advertising incomes are still dominating Google’s revenues (around 80% in the Q2 2022), but some new segments are gaining strength too. Google Cloud revenues were reported to be up by 36% year-on-year at $6.28 billion, although slightly missing analysts’ expectations of $6.4 billion. Google is the third largest Cloud business with 10% of market share after Amazon with its massive 35% share and Microsoft with 20%. Google is pressing on as its cloud revenues accounted for only 6% a year before. The company spent $180 billion for Cloud services development in 2021, or 40% above 2020 figures. This may indicate a potential in this segment that the company is counting on.
Google has a vast $70 billion payback program, or 5% of its market cap. The company does not pay dividends but generates a huge amount of cash that is enough to cover development and support share prices in the market. Google shares may regain their price at $160 in the near future and climb by 40% from current levels.
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