Alphabet Inc. (GOOG / GOOGL)

GOOG is the ticker symbol for the Class C shares of Alphabet Inc., the colossal parent company of Google, YouTube, and a host of other futuristic ventures. Its sibling ticker, GOOGL, represents the Class A shares. Think of Alphabet as a digital empire with its search engine as the heavily fortified capital, generating immense wealth, which is then used to fund expeditions into new territories like self-driving cars (Waymo) and life sciences (Verily). For investors, Alphabet is a cornerstone of the modern economy, a megacap titan whose services are so embedded in daily life that it has become a verb. Its business model is deceptively simple at its core: it provides incredibly useful services for free (Search, Maps, Gmail) and, in return, sells highly targeted advertising space to businesses. This has created one of the most powerful and profitable business models in history, making it a subject of intense study for any aspiring value investing practitioner.

From a value investor's standpoint, Alphabet is a fascinating case study in modern wealth creation. The company's primary competitive advantage is its formidable economic moat, a term popularized by Warren Buffett to describe a business's ability to keep competitors at bay.

Alphabet's moat is built on several layers:

• Brand: “Google” is synonymous with search. This brand recognition is an intangible asset of almost incalculable value.
• Network Effects: The more people use Google Search, the more data it collects, which makes its search results better. Better results attract more users, creating a self-reinforcing loop that is incredibly difficult for a competitor to break. This is a classic network effect.
• Scale: The sheer scale of its operations gives it an enormous cost advantage in data centers and research.

Alphabet's core advertising business is a cash-generating machine, producing staggering amounts of free cash flow. Value investors love businesses that gush cash, as it can be used to reward shareholders or reinvest for future growth. However, the analysis gets tricky with Alphabet's “Other Bets” segment. These are ambitious, money-losing projects like Waymo. A critical investor must ask:

• Are these ventures a brilliant use of capital that will unlock enormous future value (a concept known as optionality)?
• Or are they a “diworsification” that destroys shareholder value, a classic case of potential capital misallocation?

Many analysts use a sum-of-the-parts (SOTP) valuation to assess Alphabet, trying to value the profitable search and cloud businesses separately from the speculative Other Bets.

It's crucial to understand why there are two different stock tickers for the same company. It all comes down to voting rights and corporate control.

If you buy a share of GOOGL, you get one vote. This gives you a tiny say in matters of corporate governance, such as electing the board of directors. Think of it as a premium membership card to the Alphabet club—it costs about the same, but comes with the right to vote at the annual meeting. While your single vote won't change the company's direction, owning voting shares is a matter of principle for many investors.

If you buy a share of GOOG, you get zero votes. These shares were created primarily to allow the company to issue stock for acquisitions and employee compensation without diluting the voting power of its founders, Larry Page and Sergey Brin. For most retail investors, the lack of a vote is not a deal-breaker, and sometimes the GOOG shares trade at a slight discount to GOOGL, offering a cheaper way to own a piece of the business.

For the sake of completeness, there's also a third class of stock, Class B. These are not traded on the open market and are held almost exclusively by founders and early insiders. Each Class B share comes with 10 votes, cementing their control over the company.

No investment is without risk, not even a giant like Alphabet.

Alphabet's dominance has drawn the eye of regulators worldwide. The company faces continuous antitrust lawsuits and investigations in both the United States and Europe. A significant ruling against the company could force it to change its business practices or even break up, creating massive uncertainty.

While Google rules search now, technology moves fast. The rise of Artificial Intelligence (AI) represents both a huge opportunity and a threat. Competitors like Microsoft, which has integrated AI into its Bing search engine, are challenging Google's supremacy for the first time in years. Furthermore, companies like Amazon are chipping away at its lucrative advertising business by becoming the starting point for product searches.

With over $100 billion in cash on its balance sheet, what Alphabet does with its money is critical. The company has historically favored share buybacks over paying a dividend. Investors must continually assess whether management is deploying this capital wisely—either through smart acquisitions, productive research and development, or returning it to shareholders—or squandering it on unprofitable pet projects.