The powerful Google Inc (NASDAQ:GOOG) is still heavily reliant on search advertising for generating most of its revenues. However, the company is increasingly getting a lot of momentum in its other businesses as well. Some of these have strong growth prospects in the long-run, which will likely lead the company to grow in the 15%-20% region for years to come. Google Inc (NASDAQ:GOOG) has four catalysts that will propel the stock to the $1000 mark.
YouTube has enormous revenue growth potential which is often not reflected in Google’s own numbers. Google is tight-lipped about how much revenues its YouTube division earns, but it’s reasonable to believe that YouTube is already a multi-billion dollar segment for the company. And it is growing rapidly, and has more than 800 million unique visitors every month, who watch more than 4 billion hours of video a month.
The popular video-sharing platform is increasingly getting a lot of attention from advertisers, as Google Inc (NASDAQ:GOOG) revealed that, its top 100 advertisers ramped up their spending on YouTube by 50% in 2012, compared to 2011. A key driver of YouTube’s growth has been the skipable ad format of Trueview. Because advertisers only pay for those ads for which users actually watch the ad.
Advertising agencies and marketers increasingly prefer this advertising format on YouTube. Now, 70% of all in stream ads on YouTube are now utilizing the TrueView format. YouTube will be a beneficiary of increased global internet penetration as it gets almost 70% of its user traffic from outside the U.S.
In addition, it has a strong footing on mobile, as a quarter of its total views are on mobile devices. Both these secular trends will drive the segment’s revenues as advertisers migrate online from regular TV for the placement of video ads.
2. Hardware offerings and mobile monetization
Google Inc (NASDAQ:GOOG) is partnering with a number of firms, to market newer hardware devices, but tablet and laptop sales make up a small fraction of the company’s current revenues. But in this pursuit, the market-leading Android and Motorola, will aid substantially in growing revenues from more hardware devices.
In addition, Google Play is investing heavily to add more content and bringing in newer partners. Hardware offerings provide substantial tailwind for benefiting from Android-based platforms in the form of selling more content, as well as the placement of more Ads on mobile devices.
Price per ad on mobile are much lower relative to desktop but as more and more mobile devices are getting activated, the price will notch up. Google Inc (NASDAQ:GOOG)’s management has indicated that they expect the Mobile cost-per-clicks(CPCs) to improve going forward.
3. Cloud Computing Services
Google’s Cloud locks horns with Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corportion (NASDAQ:MSFT) and a number of other leading enterprise solutions firms. However, it seems that investors are not taking into account Google’s ability to do very well in the cloud computing business.
Amazon.com, Inc. (NASDAQ:AMZN) is widely considered the clear and runaway leader in the cloud computing space, and will likely be the long-term leader as well. However, competitors like Google Inc (NASDAQ:GOOG) and Microsoft Corportion (NASDAQ:MSFT) are ramping up their efforts to play catch-up with the disruptive Amazon.com, Inc. (NASDAQ:AMZN).
