![]() Google has quarterly free cash flow margins of 20-30% and averaged quarterly free cash flow ("FCF") of $16.3B in the last year. The $70B authorization followed a $50B authorization in the year-earlier period and Google generates a ton of free cash flow to pay for it. Google has an authorization in place to repurchase $70B of its shares in the market which is representative of approximately 5% of the technology company’s total market cap. Synergy Research Group $70B stock buyback creates support for the stock Google Cloud hasn’t grown its market share as quickly as Microsoft's Azure did, but Google is still a considerable force in the market with 36% revenue growth in Q2’22. While Microsoft has seen the strongest market share growth in Cloud in the last four years - which is a top reason to buy the software company - Google has made steady progress as well, growing its market share from 6% to 10% over a four-year period ending in Q4'21. With more workloads shifting to the Cloud, companies and retail customers are set to drive demand for Google’s cloud-based services going forward. Google is the number three in the market with a market share of approximately 10%.Īccording to Synergy Research Group, enterprise spending on Cloud services totaled $178B in FY 2021, showing an increase of 37% year over year. , Inc.'s ( AMZN) Web Service is the market leader with a share of 34%, followed by Microsoft’s ( MSFT) Azure which has a share of 21%. Google is not the market leader in Cloud, however. ![]() Google’s Cloud segment grew revenues 36% year over year to $6.28B in Q2’22, which helps the company counter revenue challenges in an increasingly difficult advertising market. Google’s Cloud business is gaining momentum due to more and more workloads shifting to the cloud and companies investing more money into their IT infrastructure and scalability. While advertising is still responsible for creating the majority of revenues (81% in Q2’22) for Google, the technology company offers investors something that other ad-heavy technology firms may not: a potential offset to a downturn in the advertising industry. Facebook has been most affected by the rise of TikTok, and the company wildly disappointed with its Q3’22 revenue forecast, in part, because of TikTok’s success in attracting younger users that are highly coveted by advertisers. , and it has been the most downloaded application in Apple’s App Store in Q2’22 with 60M downloads. Bytedance-owned Tik-Tok especially has been making in-roads with younger users in the U.S. Both companies are seeing growing top line pressure not only because advertisers are pulling back in a market that has become less predictable due to high inflation and reductions in corporate ad-spend, but TikTok is posing a growing challenge to established U.S. Plenty of technology companies have warned of a down-turn in the advertising business, including Snap ( SNAP ) and Meta Platforms ( META ). Since shares of Google have dropped about 10% since mid-August, I believe the risk profile (and the valuation) are extremely attractive right now! Google uniquely positioned to ride out cyclical advertising down-turn Google’s Cloud business especially has potential to deliver strong cash flow growth going forward and help the technology company offset some of the declines in the advertising market. ( NASDAQ: GOOG, NASDAQ: GOOGL ) ("Google") is uniquely positioned to ride out the current market volatility due to strong free cash flow, aggressive stock buybacks, and an increasingly diversified business model. ![]() economy, and Jerome Powell’s speech last week indicated that the market needs to anticipate even more interest rate increases in 2022. The market appears to be on the precipice of another down-leg: inflation continues to be a major threat to the U.S.
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