Better Buy: Amazon vs. Google
Amazon(NASDAQ: AMZN) and Google parent Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) are two of the largest, most well-known companies in the equity markets. While some might think investors know all there is to know about these two dominant tech giants, they've continued surprising to the upside, growing revenue and earnings far more than many thought possible, leading to long-term outperformance:. Both businesses have leveraged their dominant core businesses (e-commerce for Amazon, and search for Google) to incubate new growth businesses such as Amazon Web Services (AWS) and Google's self-driving car venture Waymo, becoming much more modern-day conglomerates than single-business companies. While Amazon has outperformed over the past few years, which is the better home for your investment dollars today? Other Bets include Google's "moonshot" ventures, including Access (Broadband), Calico (anti-aging), CapitalG (late-stage venture capital), GV (early stage venture capital), Verily (health data technology), Waymo (self-driving cars), and X (secret, early-stage experimental research). As you can see, Google is still highly dependent on digital advertising, and likely will be for the foreseeable future; however, Google's Cloud segment is estimated to have grown 93.9% in 2018 according to Canalys Research, making up about one-third of the Google "Other" segment, or 5% of overall revenue. Cloud is one of the most attractive growth markets out there, so should momentum continue, Google Cloud could grow into a meaningful contributor in the years ahead. And while Google's "Other Bets" don't make much right now -- in fact, the unit had a $3.35 billion operating loss in 2018 -- some businesses could become big winners in five to ten years. For instance, one analyst believes that Waymo could one day be worth $175 billion. However, none of these segments generates meaningful revenue yet, so they still remain a little bit like lottery tickets to investors, offering a possible bonus on top of the company's strong core ad platform.