Some Reasons Why Facebook Could Be the New Google

If you are looking for a company that could become the next Alphabet (NASDAQ: GOOGL), the company formerly known as Google, you should take a close look at Facebook (NASDAQ: FB). The social network has some of the characteristics of Google, and it is developing capabilities that could one day surpass Google.

Those that do not believe this thesis need to take a close look at some recent developments at Facebook. Mark Zuckerberg’s company is demonstrating that it is a serious rival to Google and a great investment.

A few of the reasons why I can think Facebook is the next Google include:

• Facebook’s social media now reach nearly two out of seven people in the world. On September 3, 2015, Zuckerberg revealed that messaging solution WhatsApp, which Facebook now owns, has 900 million users. Facebook’s own messaging solution, Facebook Messenger, has 700 million users. When added together, that makes 1.6 billion users out of a global population of around seven billion people. This could give Facebook the largest customer base in history and its media the greatest reach ever.

• Facebook’s revenue is growing at an extraordinary rate, like Google’s. Between June 2014 and June 2015 Facebook’s revenue increased by $4.63 billion. Facebook reported a TTM revenue of $10.01 billion in June 2014 that grew to $14.64 billion by June 2015.

 

• Since December 2011 Facebook’s TTM revenue has grown from $3.171 billion to $14.64 billion. That is an increase of nearly $10 billion in revenue, or revenues that more than tripled in just three years.

 

• Like Google, Facebook has a high net income: $3.738 billion for the second quarter of 2015.

 

• Facebook generates a lot of cash, just like Google; Facebook reported having $14.12 billion in cash and short-term investments on June 30, 2015, meaning that it had a lot of float. Facebook reported making $6.411 billion in cash from operations on the same day.

 

• Like Google, Facebook is at the cutting edge of research. News reports indicate that the social network now possesses an artificial intelligence that can recognize what is in photographs. Some media reports indicate that the same technology can also recognize faces. This means Facebook could be on the verge of creating a search engine that can recognize images. A website called Stuff reported that this solution is 40% faster than competitors’ tools, shades of Google.

 

• Like Google, Facebook is at the cutting edge of research. News reports indicate that the social network now possesses an artificial intelligence that can recognize what is in photographs. Some media reports indicate that the same technology can also recognize faces. This means Facebook could be on the verge of creating a search engine that can recognize images. A website called Stuff reported that this solution is 40% faster than competitors’ tools, shades of Google.

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• Facebook is also developing an AI solution that could play the ancient Chinese strategy game Go. Go is one of the board games that artificial intelligences such as IBM’s vaunted Watson have not been able to figure out. Wired reported that Facebook is on the verge of developing something, Deep Learning, with the ability to recognize images or words by simply hearing or seeing them like people do. If this could be perfected, it could develop solutions that could recognize you at a glance; think of a Facebook page that can recognize your face. That also means that Facebook could one day develop AI that can perform complex tasks such as manufacturing or designing. Obviously, the commercial potential of this could be incredible. Wired reported that this could lead to a wide range of new technology.

Is Facebook the Google of Social Media?

If all this sounds a lot like Google to you, you are not imagining things. Google is a platform, a search engine, that does a lot of things and generates a lot of cash. It also serves as a means of deploying a wide variety of new Internet solutions, many of which can generate a lot of cash.

This means that Facebook could become the Google of social media. That also means it’s a great investment because Facebook could one day generate the kind of cash Google does and be just as valuable. So if you’re looking for the next Google, it is here. Its name is Facebook.