Is Google a good investment: Q1 2024

When people own shares they feel like it is a bet on the price being voted up or down, but really you own a share of the business, which means you own a share of the profits. The market might value your company too highly or too low based on emotion but if the profit is growing, the value of your business is continuing to grow.

This is why when we look at individual companies we prefer to invest in companies that are already successful, and profitable but at a reasonable price.

This has been our rational for recommending Google to clients. It feels a bit like betting on horses that have already won the race.

Google announced quarterly results last week, and they presented a very strong performance across the board.

• Earnings per share: $1.89 vs. $1.51 expected
  • 57% increase in last year
• Revenue: $80.54 billion vs. $78.59 billion expected by LSEG
  • Increased 15% in last year
• YouTube advertising revenue: $8.09 billion vs. $7.72 billion expected,
  • 21% increase in last year
• Google Cloud revenue: $9.57 billion vs. $9.35 billion expected
  • 400% increase in last year
• Google Search revenue: $46 billion vs. $45 billion expected
  • 14% increase in last year

So, clearly a good set of numbers across the board, and the share price has increased 13% since the announcement.

Importantly, Google announced they will pay shareholders a dividend for the first time – this helps to bring in a new set of potential shareholders and it also helps to send a signal to investors that Google is a business that is being run for the benefit of shareholders.

Of the large tech companies, Google has been more cheaply priced than the others, which means it potentially has more upside than others, and less downside. You could say that risks to the business are baked into the share price.

There is always a business threat to any individual company which is why we are careful to limit our exposure to around 5% of total portfolio value.

Although we keep our feet on the ground and always need to look at our holdings critically, we can at least acknowledge that Google is currently exceeding our expectations.