In this article, we will analyze Alphabet (GOOG). The company operates the world's leading online searching engine and has also diversified its activities in AI, autonomous vehicles, smartphones, and more, boasting a $1 trillion market cap.

Shares of Alphabet had been lagging the market's massive rally over the past few months. Investors were expecting a significant decline in ad revenues, as businesses around the world have been cutting expenses in response to COVID-19. In its recent earnings report, however, the tech behemoth managed to deliver the same quarterly year-over-year revenues in constant currency, generating ~$38 billion.

While the company's search ad revenue slightly declined, its YouTube and Cloud segments saw significant growth. The latter was particularly surprising as Cloud revenues grew by more than 50% compared to Q2-2019, suggesting that the division could be a considerable growth driver in the company's future results.

The company, as a whole, has been actively changing many parts of its culture lately. Since its initial founders Larry Page and Sergey Brin, announced they are stepping down from their top executive roles, the current CEO Sundar Pichai has been repositioning the company to be more shareholder-friendly. Previously the company's revenues per segment would not be disclosed, and management would rarely if ever, communicate with shareholders. And, returning no capital to shareholders, contributed to the company pilling a humongous cash position of around $120 billion.

However, under Mr. Pichai, Alphabet has been communicating its plans more openly and has also been launching considerable share buyback programs. The company repurchased around $15.3 billion of its capital stock in the first half of 2020, compared to "only" $6.6 billion during the same period last year. Further, the board authorized an additional buyback program of $28 billion. We believe that the company is heading in the right direction in terms of governance, as shareholders get to enjoy both transparency in its operations as well as tangible capital returns.

To highlight how financially robust Alphabet is, the company just set a world record when it comes to corporate borrowing. Its $10 billion worth of bonds came in six trenches and included a 5-year bond with interest at 0.45%, and a 30-year bond with interest at 2.05%. For context, Apple's same duration bonds raised earlier this year were 1.12% and 2.6%, while for Amazon, these figures were 0.8% and 2.5%, respectively. With such cheap borrowing and a war chest of cash, we believe that Alphabet holds significant firepower to keep on investing in its moonshots like its autonomous vehicles company Waymo, and its AI ventures.  The combination of tremendous cash flow and cash on hand with a willingness to invest in ‘moonshots’ maybe what many hedge funds and institutional investors – like CAZ Investments – see in Alphabet.

Overall, Alphabet is an unparalleled company, having delivered market-beating returns throughout the years, despite its reserved shareholder communicating practices.

With significant projects on the horizon, the company keeps evolving, and the ascent of its current CEO Sundar Pichai, has seemingly brought a fresh air in its culture.

Finally, as U.S. indices keep hitting all-time highs by the day, driven by the rally in the tech sector, Alphabet is one of the few companies to retain a reasonable valuation. Based on analyst projections for FY2021 EPS of $56.89, the stock's forward P/E ratio is only around 26, making the stock a reasonably attractive buy at its current levels.