Alphabet Inc (NASDAQ:GOOGL,NASDAQ:GOOG) has been losing steam lately, with the shares of Google stock off about 5% since early June. Part of this has been due to the geopolitical uncertainty as well as a general tech slump.

But even on annual basis, Google stock has been a laggard, at least among the FANG stocks. For the past 12 months, the shares have logged a gain of 19%.

By comparison, Facebook Inc (NASDAQ:FB) has returned 37%, Netflix, Inc. (NASDAQ:NFLX) is up 83% and Amazon.com, Inc. (NASDAQ:AMZN) has gained 27%.

Now there are definitely some worrisome issues with Google stock.

During the latest quarter, the company reported a jump in traffic acquisition costs.

What’s more, Google suffered a legal blow of $2.7 billion from the European Union regarding antitrust violations.

Although, despite the seriousness of these problems, the company should still be able to effectively deal with them. More importantly, Google stock could see a pick-up in the growth ramp because of several key secular trends.

YouTube huge for Google Stock

First of all, there is video. As seen with companies like Twitter Inc (NYSE:TWTR), Snap Inc (NYSE:SNAP) and Facebook, there is furious race to capitalize on this opportunity. To put things into perspective, the traditional television ad market is about $70 billion in the US. alone, according to data from Statista.

The key advantage for Google stock is that the company has been a long-time leader in this category. Back in 2006, it spent a mere $1.65 billion for YouTube. And since then, Google has invested heavily in this property.

As of today, YouTube counts 1.5 billion monthly viewers who watch an average of 60 minutes of video a day. And the core demographics are quite attractive to advertisers. YouTube has more reach among 18-34 and 18-49 year olds than any cable network in the US.

But Google is pushing beyond user-generated content, such as with original shows from celebrities like Ellen DeGeneres and Kevin Hart. These efforts are likely to mean improved monetization.

Other Catalysts that Don’t Get Enough Attention

When it comes to the cloud, the focus tends to be on operators like AMZN and Microsoft Corporation (NASDAQ:MSFT). Yet Google quickly is gaining ground.

The two core offerings include the Google Cloud Platform – which allows for hosing of websites and apps – as well as the G Suite. During the latest quarter, Google reported a 3X increase in large deals, which are those greater than $500,000. This is a testament to the mission-critical nature of the cloud platform. Note Google has struck deals with companies like SAP SE (ADR)(NYSE:SAP) and Nutanix Inc (NASDAQ:NTNX).

Interestingly enough, the cloud opportunity is larger than the video market. According to Gartner, the spending is forecast to grow at an average compound annual rate of 18% to $383.5 billion by 2020.

And finally, there is something else about Google that should be a catalyst for long-term growth – e-commerce. This is because of the Google Home smart speaker offering as well as Google Express, which allows for delivery. It’s a powerful combo that is getting the attention of brick-and-mortar retailers that want to fend off AMZN.

Some of the recent partnerships include tie-ups with Home Depot Inc (NYSE:HD) and Wal-Mart Stores Inc (NYSE:WMT). They realize that consumers increasingly want to use devices to allow for voice-activated ordering. And GOOGL certainly has the right set of technologies for this.

According to InvestorPlace.com’s Luke Lango: “Alphabet could, within six months or so, finally start getting some significant e-commerce revenue, providing a boost to GOOG stock.”

All in all, Google management has done a fine job putting together a strategy for various megatrends. What’s more, the valuation is still reasonable. Keep in mind that the forward price-to-earnings ratio is about 24X. In other words, this does look like good entry point, especially for those investors that take a long-term view on things.

— Tom Taulli

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Source: Investor Place