3 of our tech giants’ advertising businesses are poised for further growth this year
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Club names Alphabet , Meta Platforms, and Amazon are best positioned to dominate the online advertising landscape this year, according to a new Wall Street survey. The results affirm our bullish stance on these three Big Tech giants. Based on the responses from its latest U.S. survey of ad buyers, TD Cowen analysts said Tuesday they believe Google-parent Alphabet can maintain its leadership position in digital ads. They added that YouTube should be able to take incremental share this year. The survey, which was conducted at the tail end of last year to gauge 2024 ad trends, found advertisers favored Google Search for several reasons, especially because the platform delivers the highest return on investment. Google Search was the platform of choice among ad buyers for its best-in-class measurement tools and generative artificial intelligence tools, according to the Cowen survey. Analysts estimate that Alphabet’s gross revenue for the fourth quarter will grow 12.8% year-over-year to $85.8 billion. The firm increased its price target on the stock to $170 per share from $155 and reiterated its buy-equivalent outperform rating. GOOGL 5Y mountain Alphabet 5 years Jim Cramer on Tuesday noted the fundamental strength and was also excited about Alphabet stock from a technical standpoint. “Alphabet may be ready for its next move” higher, based on what he called “one of the greatest charts” he’s since in a long time. The stock has quietly been pushing towards its November 2021 all-time closing high of nearly $150 per share. Shares closed 1.5% higher in Tuesday’s session at almost $141 apiece. We’re encouraged by YouTube, which became home of the NFL Sunday Ticket this season. Advertising is how Alphabet makes most of its money. The third quarter saw better-than-expected YouTube ad revenue and Google Search revenue. The advertising dominance is one of the reasons we’re sticking with Alphabet stock. We also like what we’re seeing from Alphabet’s growing Services business, the recurring sales that investors come to expect from tech giants recently. Google Cloud revenue did miss estimates in Q3 — during a stretch that saw competitor Microsoft and its Azure cloud show strength. However, at the time of the release in late October, we cautioned not to get too negative on Alphabet stock due to cloud softness as some of the weakness can be attributed to ongoing spending on optimization efforts. Out of discipline following last year’s 57% gain, we trimmed Alphabet on Jan. 2. We also made small sales in the five other Magnificent Seven stocks we own, including Meta and Amazon. META 1Y mountain Meta Platforms 1 year The Cowen survey, which gathered responses from 54 senior U.S. ad buyers who advertise on digital and traditional advertising platforms, also showed a preference for short-form video service Reels — Meta’s answer to TikTok. Meta’s focus on Reels growth should help the company capture an increasing share of the business,” the analysts said. They forecast fiscal year 2024 total revenue for Meta to come in 11.9% higher at $150.1 billion. Meta’s advertising game is strong. Jim sees Instagram as the “best buy” on the internet. We just hope CEO Mark Zuckerberg tries to minimize spending on the money-losing metaverse. AMZN YTD mountain Amazon 1 year Touching on Amazon, 39% of Cowen survey participants expect the e-commerce and cloud giant to “emerge as a meaningful ad platform.” Ad buyers cited their interest in advertising on Prime Video in 2024. Of the advertisers that already spend on Amazon, 43% plan to increase spending on the platform this year as they shift their spending away from television budgets and other digital platforms. Given Amazon is an e-commerce giant with more than 200 million Prime subscribers, we’re confident the company’s ad business can compete with its fellow mega-cap tech players. We also like the company’s build-out of quicker e-commerce delivery, a reacceleration of its Amazon Web Services cloud division, and continued efforts to optimize costs. (Jim Cramer’s Charitable Trust is long GOOGL, META, MSFT, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The exterior of the new headquarters of Google is seen at 550 Washington Street in Hudson Square on January 09, 2024 in New York City.
Michael M. Santiago | Getty Images
Club names Alphabet, Meta Platforms, and Amazon are best positioned to dominate the online advertising landscape this year, according to a new Wall Street survey.
The results affirm our bullish stance on these three Big Tech giants.
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