Shares of Alphabet Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) are on a one-on-one race to see which tech behemoth will be the first to reach $1,000 per share — an important psychological mark. But regardless of which stock is first to accomplish the feat, GOOGL stock still can print tons of profits in the quarters and years ahead.
Specifically, I believe Alphabet, fresh off reporting better-than-expected first quarter fiscal 2017 earnings, will deliver returns of 15% in the not-so-distant future.
In other words, GOOGL stock isn’t just heading to $1,000 … it’s going to make it to $1,100.
Reasons to Love Alphabet
Last week, Warren Buffett, CEO of Berkshire Hathaway Inc. (NYSE:BRK.B) suggested that he regretted not owning GOOGL during its infancy, but that Alphabet might have become a little too pricey. Buffett admitted Google’s parent and Amazon would have been better investments instead of International Business Machines Corp. (NYSE:IBM) several years ago.
But while Buffett is known for his value-picking strategy, his admission implied that Alphabet’s upside is now limited. GOOGL stock closed Wednesday at $942.14, about 6% away from $1,000. The shares have risen roughly 20% year-to-date, almost quadrupling the 5%-plus returns of the S&P 500.
But despite being priced at 23 times fiscal 2018 earnings estimates of the $40.25 per share, there is still tons of value in GOOGL stock.
The main drivers of the Google’s business haven’t changed. Alphabet recently showed that its core search business is not only driving higher user engagement, it was also encouraging to see increased volumes driven by a 44% rise in total paid clicks. What’s more, while Facebook Inc (NASDAQ:FB) is broadly regarded as dominating mobile, the strength of Google’s mobile platform was…