Alphabet GOOGL expanded its search capabilities on the heels of new tools launched for website owners, enhancing their content's visibility in Google's search results.
Notably, with the new ProfilePage markup tool, creators' profiles can be displayed in Google Search results, showcasing details like name, handle, photo, follower count and content popularity.
Meanwhile, the DiscussionForumPosting markup tool enhances Google's ability to identify and categorize conversations from online forums, improving their ranking and indexing in search results.
Additionally, Google is introducing new reporting features in its Search Console to assist site owners in implementing changes, including errors, warnings and valid items related to marked-up pages.
The introduction of these new tools will enable websites hosting first-person perspectives to accurately and comprehensively display their content in Google's search results.
Alphabet is poised to gain solid traction across social media and discussion forum website owners on the back of its latest move. This, in turn, will likely boost traffic on the company’s search platform.
Alphabet Inc. Price and Consensus
Expanding Search Capabilities
Apart from the latest move, Google introduced two new initiatives to improve user search, enabling users to follow topics and create collaborative annotation spaces on web pages.
Further, the company recently unveiled new updates to its AI-powered search feature, Search Generative Experience, including alternate drafts and image generation, allowing users to specify writing types and receive conversational results.
Additionally, Google introduced a "Perspectives" filter to top search results based on others' experiences, including discussion boards, Q&A sites and social media platforms with video.
We note that all the above-mentioned endeavors will likely drive growth in Google’s Search revenues.
In third-quarter 2023, search revenues from Google-owned sites increased 11.3% year over year to $44.03 billion.
Our model estimate for fourth-quarter 2023 Google Search revenues is pegged at $46.9 billion, indicating growth of 10% from the year-ago quarter.
Moreover, the above-mentioned endeavors are expected to provide Alphabet with a competitive edge over its biggest competitor in the search business, namely, Microsoft MSFT, which is also making concerted efforts to capitalize on growth opportunities present in the search engine space.
Microsoft is riding on the success of its search engine, Bing, by integrating its search platform with OpenAI’s ChatGPT tool.
Notably, Microsoft introduced a “rewrite” button in Bing, which allows users to edit a message in a conversation instead of copying and editing manually.
Strong momentum in Alphabet’s search business will, in turn, aid the Google Services segment’s performance.
In third-quarter 2023, Google Services’ revenues increased 10.8% year over year to $67.99 billion, accounting for 88.6% of total revenues.
Our model projects fourth-quarter 2023 Google Services revenues at $72.79 billion, indicating growth of 7.3% from 2022.
Strength in the underlined segment will likely aid its overall financial performance in the upcoming period. This, in turn, will instill investor optimism in the stock.
Our model estimate for fourth-quarter 2023 total revenues is pegged at $81.95 billion, indicating year-over-year growth of 7.8%.
Alphabet has gained 55.5% on a year-to-date basis compared with the industry’s rise of 55.4%.
Zacks Rank & Stocks to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Badger Meter BMI and Arista Networks ANET. While Badger Meter sports a Zacks Rank #1 (Strong Buy), Arista Networks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Badger Meter have gained 34.8% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.
Shares of Arista Networks have surged 79% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 19.77%.
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