Storytelling is powerful. Two different writers can take the exact same company and weave the same facts in very different ways to create a vision of its future, and if you’re not careful, you might find both of those stories compelling. Only time tells which of those stories turns out to be closer to the truth. And in the end, the financial results a company produces are more important than the stories it and its investors told themselves along the way to justify their actions.
Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is a great example of a company whose financial performance stands in stark contrast to some of the stories that investors have told about it. At one point not long ago, many investors had entirely counted Alphabet out, arguing that it had fallen hopelessly behind in key areas like cloud computing and artificial intelligence. That’s a story that the first article on Alphabet for the Voyager Portfolio discussed at length. But as you’ll see in this second article, Alphabet’s financial strength has shown a very consistent upward trajectory that gave longtime bulls confidence that their patience would be rewarded.
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Alphabet’s key financial metrics have shown amazing growth over the past 10 years. Between 2015 and 2025, here are some of the things the tech giant has accomplished:
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Revenue has jumped from $75 billion to over $400 billion, with a compound annual growth rate (CAGR) of over 18% per year.
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Operating income has risen from $19.4 billion to $129.2 billion, a 566% rise that works out to a CAGR of close to 21%.
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Alphabet has boosted its spending on research and development five-fold over that 10-year time span, but its operating margin has improved by more than six percentage points to 32%.
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Net income has risen to more than eight times where it started, with net margins soaring by 11 percentage points to 32.8%.
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Alphabet’s capital allocation moves have included massive share buybacks that have cut its outstanding share count from about 13.7 billion shares 10 years ago to about 12.1 billion today.
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As a result, improvement in earnings on a per-share basis has been even more impressive than the rise in net income, going from $1.14 per share in 2015 to $10.81 per share last year.
What’s particularly noteworthy about Alphabet’s results is how consistent they’ve been. There been only a couple of major hits to the tech giant’s upward trajectory. In 2017, the European Commission imposed a $2.7 billion fine on Alphabet, and combined with adjustments related to changes in tax laws that year, Alphabet’s net income fell year over year.
