Alphabet Inc - Ordinary Shares - Class A

Fundamentals

PREFACE
Google held its annual I/O conference yesterday and while there was a lot of news, perhaps the largest overall theme was simply this: Google is getting serious about artificial intelligence and that investment has become pervasive in every product it is bringing to market.

START
It begins very simply with research and development (R&D). In fact, if we take every company in every sector that trades on North American exchanges, Google spends the second most on R&D:



Before we get to the wonderful new developments announced yesterday at the I/O conference, here's the secret about that R&D and the tangible if not impossible results:

GROWTH: VIDEO
While Facebook (NASDAQ:FB) claims it receives 10 billion video views a day, Google announced this on its latest earnings call:


YouTube Red, the pay streaming video on demand (SVOD) service is also swinging at Netflix's (NASDAQ:NFLX) core business, and although no one is talking about it, it’s working. But that's just a cool fact -- it's not the secret.

GROWTH: ADVERTISING
Google's cost per click (CPC) on its advertisements have been decreasing as mobile becomes a greater share of its product mix, but we also got this news:


GROWTH: E-COMMERCE
Not many people even thought of Google when it came to this thematic shift and I'm sure nobody knew it was making waves as large as it has. We're talking about a war with Amazon (NASDAQ:AMZN). On April 13th, PR Newswire revealed that retail sales from Google Shopping grew by 52% year-over-year in the first quarter. But that's just the tip of the iceberg:


Now here's where the secret Google is working on gets reveled simply due to success. While those e-commerce numbers are stunning, this is also a fact: Google Product Listing Ads were rolled out to all US advertisers in 2011. This isn't a new business, it's just newly successful, and this is why:

GOOGLE'S SECRET
On the most recent earnings conference call, Google's CEO Sundar Pichai reminded us of this:


Other than a few more sentences, Google's CEO didn't touch on the progress. But now it's the secret in plain sight. While Facebook's Mark Zuckerberg openly and loudly proclaimed that he was dedicating 2016 to artificial intelligence in his house, Google has been more subtle. That subtlety is now exploding.

THE RESULT
At Google's I/O conference we saw the real goods:

1. A new virtual reality (VR) system called Daydream set to compete directly with Facebook's Oculus.



2. Google Home -- a new an Internet-connected speaker that listens for your voice commands to play music or control lights in the home to compete directly with the Amazon.com (NASDAQ:AMZN) Echo.



3. A new chat service called Allo, which will use Google’s computers to predict your response, essentially eliminating the effort of typing. Here's a phenomenal quote straight from Google's official blog:


4. Duo, a companion app for one-to-one video calling. The goal here is to make video calling faster and more reliable, even on slower network speeds.



5. The Google assistant: an ongoing two-way dialogue between you and Google that understands your world and helps you get things done. It's a Google for you, by you.

THE IMPACT
Google has seen quarter-over-quarter increase in CPCs from Google sites for the first time since the first quarter of 2014. It has seen huge growth in online video advertising as YouTube grows. And now, it has turned a once dead product that was rolled out five years ago into a booming e-commerce business.

And, while the world sits breathless wondering what Apple will do next to turn the growth spigot back on, Google has kept it on and is accelerating it in areas once thought untouchable.

SEEING THE FUTURE
There's so much going on with Google we can't cover it all in one report - it spans seven different thematic shifts in technology and it will battle Amazon, Facebook, Netflix and Apple for decades. But, there is one firm which powers all of the artificial intelligence and deep learning that each of these mega caps are pursuing. This is how to find the 'next Google' or 'next Amazon,' we have to get ahead of the curve. This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have.

Each company in our 'Top Picks' is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:



The Internet of Things (IoT) market will be measured in trillions of dollars as of next year. CML Pro has named the top two companies that will benefit. Then there's cyber security:



Market correction or not, recession or not, the growth in this area is a near certainty, even if projections come down, this is happening. CML Pro has named the single best cyber security stock to benefit from this theme.

These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.

The author is long Apple shares both in his personal account and family owned accounts.

Thanks for reading, friends.


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