It has not been a great few months for Google owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). The tech giant has been battling concerns over everything from an advertising downturn to the impact of artificial intelligence on search demand. Alphabet stock has spent a lot of 2023 so far fairly close to $100.
On that basis, imagining the Alphabet stock price ever hitting $300 may seem fantastic. But I do not think it is. The shares have grown tenfold since 2009. I think tripling in the coming decade or so is certainly possible.
The bull case
My optimism is grounded on some key advantages I reckon Alphabet has.
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The world population is growing and more and more people spend an increasing amount of time digitally connected. But they typically need a guide for at least part of their experience.
Whether it is for finding information, filing information in the cloud, collaborating with others, or using a video-sharing platform, billions of online users regularly rely on service providers who bring the digital to world to life for them. While the applications may change, I do not expect those basic needs to go away.
Alphabet is one of the leading companies in this space. It has built an ecosystem of services that makes it difficult for many users to leave without having to invest a lot of time moving data and learning how to use an alternative.
This ecosystem is a huge advantage in my view and could help set Alphabet up to keep growing its user base in future, as well as to earn more money per user from its existing customers.
It is easy to lose sight of the fact that Alphabet is still a relatively young company in the grand scheme of things. It is only 25 years old and I think it has a long growth runway ahead of it.
Some concerns
However, as the fall in the Alphabet stock price over the past year reminds us, there are risks here too.
Given the enormous profits made by Alphabet, there is no shortage of competitors who would like to eat its lunch. That is true now and I expect it to remain the case over the long term.
As a company gets larger, it can be difficult for it remain nimble and dynamic. But those are important attributes in the tech space.
If a firm gets too big, there is a risk regulators will try to break it up.
The stock at $300?
I am realistic about the risks, but I also think Alphabet has tremendous potential.
It has proven its ability time and again. Yet it still has huge room to grow and its end market could get significantly bigger in coming years.
Alphabet has been cutting costs, and that could help improve profitability in the medium term. But it is the long term that I am excited about when it comes to Alphabet stock.
I think it has the prospect of doing as well in the coming 14 years as it has in the past 14. In theory, that could push it to $1,000. But even $300 would make me happy as an Alphabet shareholder!
