- Google (GOOG,GOOGL) strengthens security with its plan to purchase Beggar (NASDAQ:MNDT) This year.
- CEO Sundar Pichai outlined aggressive spending plans for data centers and office infrastructure.
- Don’t overlook the upcoming stock split.
It’s a good time to fill up Google (NASDAQ:GOOG,NASDAQ:GOOGL) Inventory. Bearish sentiment is rising again, echoing the idea that the search, cloud and tech giant is finally hitting some sort of permanent downturn. This seems incredibly unlikely as the company is arguably as strong as ever.
Three main reasons for Google’s stock optimism are outlined above. Let’s move on to those below as Google plans to buy Mandiant, invest in data centers and offices, and undertake a stock split.
About six weeks ago, Google announced its intention to acquire Mandiant, a cybersecurity company. The $5.4 billion all-cash deal is expected to close before the end of 2022. This implies that it doesn’t have much ability to swing prices in the short term.
While that’s likely true, this is a strong move for Google as it signals the company’s intention to increase security, especially in its cloud. Mandiant is well known for the Mandiant Advantage platform, which has been widely used to investigate and analyze security vulnerabilities and events.
Google will not only get this platform, but also control of Mandiant’s consulting services. This means Google’s cloud lag will be counting on Mandiant to help it turn over a new leaf. Although Google Cloud is growing rapidly, it failed to post a profit when the deal was announced. from Amazon (NASDAQ:AMZN) Amazon Web Services controls 32% of the cloud worldwide, while Microsoft (NASDAQ:MSFT) Azure accounts for 17%.
Google controls a relatively small 7% and is clearly looking to increase that share while chasing cloud profits. Mandiant gives it a much better chance of doing so, as it can sell the platform and consulting services while building security within its native cloud.
Infrastructure construction continues
Two weeks earlier, CEO Sundar Pichai announced that the company would invest $9.5 billion to build data centers and offices this year. The company has invested $37 billion in 26 states in data centers and offices over the past five years. This equates to an average of $7.4 billion per year over this period. Thus, the company increases its investments on a relative basis in 2022.
The company noted that this move might seem illogical to some. After all, the movement towards remote work has taken on a significant shape over the past few years.
To counter this point, the company is throwing the angle of economic growth and job creation. It makes sense. Google says its $37 billion investment over the past five years has created 40,000 full-time jobs. He predicts the $9.5 billion investment will create an additional 12,000 full-time jobs at Google in 2022.
GOOG Stock Split
Yes, the final reason I’m bullish on Google is its stock split. It may seem like beating a dead horse at this point, but the stock split is a good thing.
Readers will be aware that stock splits do not magically increase the pool of profits distributed to shareholders. So when Google splits the stock 20 for 1 in July, investors get the same earnings per share (EPS) just by splitting 20 ways.
It’s the psychological effect that really matters. Google shares that previously traded at $3,000 per share will suddenly trade at $150. This makes the company much more accessible to investors, although not much has changed. It’s the same reason You’re here (NASDAQ:TSLA) and Amazon are undertaking similar spinoffs.
What to do with GOOG Stocks
Google is expected to post EPS down 2% this quarter. It could logically fall on the news. However, I would pick him up right after the earnings release, as his actions have shown their resilience time and time again. Google always grabs the headlines because of its position as one of the most valuable and often controversial companies in the world. But he always seems to bounce back despite the wishes of those who revel in his downfall.
At the date of publication, Alex Sirois did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.