We recently put together a list of the 10 best internet content stocks to buy. In this article we will look at where Alphabet Inc. (NASDAQ:GOOG) is one of the best Internet content stocks.
According to Grand View SurveyThe value of the global market for digital content creation was $25.6 billion by 2022 and is expected to grow at a CAGR of 13.5% between 2023 and 2030. By 2023, North America dominated the digital content market. The main drivers are the increasing use of social media and the digital change occurring in various sectors. According to a survey by Kepios, 62.3% of people around the world use social media. As of April 2024, the average daily usage is 2 hours and 23 minutes according to this study. Kepio’s analysis shows that the number of people using social media has grown significantly during the first three months of 2024, and annual growth rates are still significantly above 5%.
Content creation is also being transformed by artificial intelligence. According to Custom Market Insights, the global market for AI-powered content creation was valued at $2.3 billion in 2024 and is expected to grow at a compound annual growth rate of 7.7% to $7.9 billion by 2033. Furthermore, AI programs such as GPT -4 are used to generate images, music and text. Gartner predicts that 30% of all digital content will consist of artificial intelligence by 2025. This facilitates hyper-personalization, allowing material to be personalized for specific consumers while streamlining the content creation process.
Secondly, the popularity of short video footage is skyrocketing and has become a major trend in the content production industry. Platforms like Instagram Reels and TikTok have paved the way for this movement. According to a HubSpot survey, 85% of marketers expect short videos to be the most successful type of social media content by 2024. The snackable aspect of this format makes it ideal for capturing the attention of increasingly volatile internet consumers.
Third, digital content is expected to become more interactive in the future. Advances in virtual reality (VR) and augmented reality (AR) offer greater possibilities for immersive experiences. According to a report by PwC, the AR and VR market is expected to reach $1.5 trillion by 2030.
Looking more broadly, there are some significant growth prospects in the sector, which is expected to reach $3.4 trillion by 2028, according to PWC’s Global Entertainment & Media Outlook 2024-2028. Despite ongoing unrest and the need to reinvent business models, the sector offers significant income opportunities. Growth is expected to be driven by advertising, with spending expected to reach $1 trillion by 2026 due to connected TV and internet advertising. Due to market saturation, streaming services are being forced to explore ad-supported business models and creative content. Gaming revenues are predicted to exceed $300 billion by 2028, especially in Asia Pacific. The industry is still booming. Companies that need to orient themselves to changing market dynamics will find more opportunities in fast-growing regions and market categories.
Methodology:
We searched Internet Content ETF holdings and online rankings to form an initial list of 20 Internet Content stocks. We then selected the 10 stocks that were most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds with stakes in them, as of the second quarter of 2024.
Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research shows that we can outperform the market by imitating the best stock picks from the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points. (see more details here)
Alphabet Inc. (NASDAQ:GOOG)
Number of hedge fund holders: 165
Alphabet Inc. (NASDAQ:GOOG), a holding company, owns Google, the largest online company. Just under 90% of the total revenue the California-based company generates comes from selling ads on Google services. Google services also include online advertising and sales through Google’s platforms (Play Store sales and in-app purchases), devices (Chromebooks, Pixel smartphones and smart home products such as Chromecast), and subscription services (including YouTube TV, YouTube Music). . Google Cloud, the company’s cloud computing platform, generates about 10% of Alphabet’s revenue. The remaining amount comes from the company’s investments in advanced technologies, such as Waymo, Google Fiber and internet and healthcare access.
Alphabet Inc. (NASDAQ:GOOG) is seen by analysts as a group of exceptional companies. It has become a dominant force in the technology industry, generating tens of billions of dollars in free cash flow annually, with offerings ranging from self-driving vehicles and cloud computing to advertising. Despite antitrust concerns surrounding Alphabet’s core search businesses, investors remain confident in the company’s overall strength and believe it will maintain its leadership position in multiple sectors, including search, artificial intelligence, video and cloud computing.
Diamond Hill Large Cap Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:
“Our largest individual contributors in the second quarter included Amazon, Texas Instruments and Alphabet Inc. (NASDAQ:GOOG). Media and technology company Alphabet also continued to post strong results in its search, YouTube advertising, YouTube subscription and cloud businesses. Stocks rose in an environment that continues to favor mega-cap tech companies.”
In short, GOOG is in 4th place on our list of the best internet content stocks to buy. While we recognize GOOG’s potential as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns within a shorter time frame. If you’re looking for an AI stock that’s more promising than GOOG but trading at less than five times its earnings, check out our report on the Cheapest AI Stock.
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Disclosure: None. This article was originally published on Insider Monkey.
