While you’re checking your stocks on your iPhone and daydreaming about what Frank Underwood will be up to on House of Cards later this month, consider this: More than 3 billion people on Earth still have no or poor access to the Internet.
Whoever figures out a way to get those billions online will likely have created a profit gold mine.
Elon Musk, of Tesla electric vehicles and SpaceX rockets fame, thinks he has the solution: a network of hundreds of low-orbiting satellites that will deliver high-speed, low-cost Internet to the most remote places on Earth.
He’s not going to be able to build this “Space Internet” alone, however.
Today, I’m going to show you which company is already helping to make Musk’s latest dream a reality.
But that’s just a piece of one of the biggest puzzles going in today’s stock market. This tech company has made a series of moves that don’t seem to fit together – but I see them playing out into a smart investment that will make shareholders major dollars over the long term.
It’s got Wall Street perplexed.
However, I’m an expert “jigsawer” – and today we’re going to solve this puzzle together…
Putting It All Together
Times like these make me glad I spent so many hours as a kid putting together jigsaw puzzles at the kitchen table with my mom and grandmother.
As a challenge – and to make it more fun – we never looked at the picture on the puzzle box before we finished. We considered that “cheating.”
In other words, we had to make sense of the all the pieces on our own.
And over the past few years, many of the moves from Google Inc. (Nasdaq: GOOGL) – driverless cars, robotics, wearable technology, life-extension healthcare and now satellites – have seemed like so many jigsaw-puzzle pieces dumped on the floor.
While many on Wall Street couldn’t see it, Google was laying out its vision for the future – if you knew what to look for.
I have to admit. I had trouble seeing it at first, too.
But last fall, when Google signed a $1.16 billion, 60-year lease to take over NASA‘s Moffett Airfield in Silicon Valley, it started to come together for me.
Google is sidestepping around the tech sector’s latest squabbles and trends and is building the ultimate conglomerate of the near future.
Wall Streeters might see Google’s moves beyond online search and mobile advertising as distractions and “pet projects” of the company’s starry-eyed executives.
But really, these moves into robotics and satellites arise naturally from Google’s constant innovations in its current operations – and they will form the heart of the franchise going forward.
Now you know why I’ve told you folks to think of Google as the ultimate ETF on futuristic technology – but one that throws off enormous free cash flow and profits today.
With that in mind, let’s take a look at the three main areas it hopes to dominate in the next few years.
As the world’s largest search engine, the only way Google can obtain new customers for its primary business is by going after those 3 billion people with poor Internet access.
Google is doing that by disrupting the hyper-growth world of wireless communications the same way it did to online search 15 years ago.
That’s why Google recently joined with Fidelity (NYSE: FIS) in a $1 billion investment in Space Exploration Technologies Corp. (SpaceX).
That gives Google about 10% of Elon Musk’s SpaceX. And it advances the Mountain View, Calif.-based company’s bid to use satellites to provide wireless Web access to the two-thirds of the world’s 7 billion people who lack good Internet service.
By backing SpaceX, Google wants to launch a new generation of small satellites that will beam Web signals to remote regions of the world.
Along those same lines, Google is also testing a service known as Project Loon that uses high-altitude balloons to beam 4G LTE cellular signals down to Earth. It has tested Project Loon in Northeast Brazil, California‘s Central Valley and New Zealand.
The payoff for either approach could be huge for Google — it could give the firm as many as 4.6 billion new customers.
Google also recently announced that it’s working with Cablevision Systems Corp. (NYSE: CVC) on an advanced smartphone technology.
The service will ferret through cellular connections, provided by Sprint Corp. (NYSE: S) and T-Mobile US Inc. (NYSE: TMUS), and Wi-Fi “hotspots,” and then pick whichever offers the best service at any moment.
And it could debut before the end of this summer.
Google’s move into robotics makes more sense when you think of the company’s search engine as more than a simple tool – but as a form of artificial intelligence. And then consider what robots as intelligent as Google’s search engine would be able to do.
The company’s decision to cosponsor a major robotics museum exhibition speaks volumes about its aspirations in this field.
Robot Revolution, the show, kicks off May 21 at Chicago‘s Museum of Science and Industry.
Google’s sponsorship underscores just how quickly it has become one of the nation’s leading robotics firms – and hints at its future programs.
Its biggest foray occurred in late 2013 when it acquired robotics pioneer Boston Dynamics. Founded in 1992, Boston Dynamics has collaborated with NASA and Harvard University and counts the Pentagon as a key client.
A YouTube video of Boston Dynamics’ BigDog robot scrambling over rough terrain has been viewed some 16.5 million times. The video shows the bot climbing hills, traversing snow and stabilizing itself after a person kicked it.
Besides Boston Dynamics, Google has purchased at least six other firms in the sector. They include SCHAFT, a small Japanese firm working on humanoid bots, and Vision Factory, an Oxford, U.K., startup that has developed advanced computer vision systems.
And Google has done more than just about any firm in the world in developing robotic cars. Begun in secret in 2009, the company’s Self-Driving Car Project has already logged more than 700,000 miles on the road. One of Google’s bot cars got a driver’s license in Nevada in 2012.
Like I said, Google is pursuing robotics technology as a natural extension of its search-related research and development into machine learning and artificial intelligence.
Quite simply, Google wants to become the operating system – or brains – for advanced robots that build products, drive cars and assist humans at work and home.
The final piece of Google’s future puzzle – life extension – hasn’t quite fit into our jigsaw yet. But it’s becoming clearer and clearer nearly every week.
That part of the company made waves Jan. 29 when in article in The Atlantic disclosed that Google X labs have begun making artificial human skin.
Google wants to build a FitBit-style wristband that can detect impending heart attacks as well as cancer and other diseases.
To test their device, Google scientists needed to create realistic human arms, complete with skin. Once completed, the wristband will harness nanoparticles to search a patient’s body for disease symptoms long before they show through X-rays, MRIs or other conventional technology.
For Google, this was the second major piece of medical news in just a few days.
Google X confirmed Jan. 27 that it has joined forces with Biogen Idec Inc. (Nasdaq: BIIB), a large-cap biotech firm known for its multiple sclerosis (MS) drugs.
Harnessing sensors, software and data-mining tools, the companies want to use new insights to help determine why MS progresses differently among individuals in the hopes of finding better treatments.
The Biogen joint venture follows a similar pact Google reached in January 2014 with Novartis AG (NYSE ADR: NVS). Under that alliance, Novartis is using Google’s smart contact lens to measure glucose levels in diabetes patients.
And in its biggest medical deal to date, Google joined forces with AbbVie Inc. (NYSE: ABBV) in September to create California Life Sciences (Calico) in a quest to extend life. The two companies have agreed to invest up to $1.5 billion in drug research.
Focused on analyzing genetic data, Calico intends to use this information to create innovative treatments for age-related diseases.
As you might expect when confronted with such a puzzler, Wall Street investors have caused Google’s stock to lag the overall market over the last year. But that’s about to change as the puzzle reveals itself.
With a market cap of $360 billion, the stock trades at roughly $528 a share. In the fourth quarter, Google’s earnings per share jumped 40% to $6.91 a share.
If it just had annual increases of half that amount, it could double earnings in about three and a half years. To be conservative, I’m projecting that earnings and the stock price could rise by 50% over that period.
That makes Google both a play on exciting future tech and a foundational investment for day.
In other words, you don’t have to wait until the puzzle is complete to profit from the company’s vision of the future.
Editor’s note: Which of Google‘s “sidelines” is most exciting to you? Or are you anticipating the next advancement in search? Let us know in the comments below. We love hearing from you.
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