If I’d put £10,000 into Alphabet stock a year ago, here’s what I’d have now

Whatever you’re searching for, one of the first stops online is probably Google. Lately I’ve been looking for good investment opportunities – and one of my first stops was the parent Google Alphabet (NASDAQ: GOOG ) (NASDAQ: GOOGL ), which I have added to my portfolio. I feel optimistic about the prospects – but if I had invested £10,000 in Alphabet shares a year ago, how would I have got back?

Poor performance

In a word: bad. During the month, Alphabet’s share price changed to +25%.

The company doesn’t pay dividends, so my total return will be based on the movement of Alphabet’s stock price.

But wait – it gets worse! The stock price has fallen 25% in a year. But it’s worth the dollar. So if I had put down $10,000 a year ago, now I would have a stock worth around $7,500. But if I had invested £ 10,000 last year, it would have been converted to dollars to buy Alphabet stock.

If I want to sell shares today, the result will be converted back to pounds (if my share trading account is denominated in sterling). So I will be hit twice – a 25% share price decline and an 8% currency conversion loss over the last 12 months. This means that a £10,000 investment would now be worth less than £7,000.

Distress alphabet stock

But Alphabet is supposed to be a growth stock. Losing something like just one year is not the kind of growth I expect when investing!

What has happened?

There is a shift in investor sentiment toward growth stocks in general. Fears about declining digital advertising revenues are weighing on Alphabet and I see this as an ongoing risk for the stock. Additionally, the risk that ChatGPT and other AI tools will dramatically disrupt the search market adds to Alphabet’s woes. AI products themselves have not convinced investors (yet) and made them believe that they can succeed in the AI ​​market as they did with search.

Looking forward not backward

But while the risks are very real, I continue to see Alphabet as an outstanding business with excellent long-term prospects. Revenue growth slowed last year but was still at an annual rate of 10% (although in the fourth quarter it was only 1%). Annual revenue of $283bn shows what a big company Alphabet is.

Net income was down 21% compared to the previous year, but still more than $1 billion weekly on average. I think our huge user base, technical know how, proven business model and wide reach will help us to be profitable in the coming years.

So, although the stock has not rewarded investors in the past year, that has resulted in an attractive price. I have taken advantage of it in the hope that this tech giant will do better in the coming year.