(Barron's columnist Jack Hough correctly predicted in a January 21 story that Alphabet would rise by more than 20% within a year. The stock did that in six months, though it's pulled back slightly. The key trends he mentioned in his column remain largely accurate and are outlined in this sum of his story, below.)

As spending on digital advertising overtakes that of television, and with mobile now making up more than half of all digital ad spending, Google’s parent company Alphabet Inc. (GOOGL) is well-positioned to reap the benefits.

Citing the growing dominance of digital and mobile ad spending in an article published by Barron’s near the end of January earlier this year, Jack Hough predicted that Alphabet’s share price would rise by at least 20%. At the time, Alphabet’s class A shares were trading at around $825.

While the price of those shares rose above $1000 in early June, surpassing the 20% gain predicted by Hough, it is currently sitting around $940. That is still around a 14% gain, more than 18% if one uses the price at the start of the year, and there is still another four months left to go in 2017. (To read more, see: How The Internet Web Ad Industry Works.)

Mobile Leading Digital Dominance

Hough’s analysis at the start of the year was based on forecasts from Magna, an advertising industry forecaster. According to Hough, Magna predicted digital ads would grow to $202 billion during 2017, reaching 40% of all ad spending compared to just 36% for television. Magna’s prediction for mobile was that it would make up 52% of all digital ad spending by the end of the year.

Already by June, Magna, in its “Spring Update,” had revised its forecast for total digital ad spending from $202 billion to $204 billion for 2017, and claimed that mobile had already reached 54% of all digital ad spending. By 2021, total spending on digital advertising is expected to make up 50% of all ad spending as it grows to $300 billion. That growth is largely expected to be driven by mobile social media and search advertising.

Alphabet's Advantage

Together with Facebook, Alphabet controls 54% of digital advertising, a 10% increase from a year ago, according to Hough. As owner of Google, the world’s leading search engine, and Android, the top operating system for mobile phones, Alphabet is especially well positioned to profit from the trends in ad spending. (To read more, see: Facebook, Google Dominate as Mobile Ad Spending Hits Record High.)

That’s not all, however. Alphabet also owns YouTube, a significant player in the social media arena, and a significant contributor to Alphabet’s recent revenue growth. Much of YouTube’s recent success is attributable to the combined effectiveness of two of Alphabet’s advertising tools: TrueView and DoubleClick Bid Manager. Both tools allow advertisers to be more selective in targeting appropriate ads for different consumers.

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