Google Inc. (NASDAQ:GOOG) has taken center stage in both investment and tech discourse over the past several days. As noted in one of our previous stories, Google Inc. (NASDAQ:GOOG) reported stellar Q3 results, posting earnings of $8.75 a share, up from $6.53 a share in the year-ago quarter. Following Google’s impressive earnings, its stock gained incredibly on the market to surpass the $1000 mark for the first time ever. Investors are now expressing divergent views as some of them argue that the search provider, despite presenting favorable fundamentals, will not sustain the rally. Interestingly, this may not be the case. Those waiting to buy on the pullback may have to wait much longer.

Mobile Becomes Dominant Force

The main headline in Google’s third quarter earnings was not the 12% yearly uptrend in revenue, but rather the central roles that ads and mobile are playing in the bigwig’s greater agenda.
To digress a bit for the sake of providing context, ad revenue made up $13.1 billion of Google’s $14 billion revenue during the third quarter. Mobile similarly played a central role as iterated by CEO Larry Page who pointed out that almost 40% of YouTube’s ad revenue during the third quarter came from mobile, up from 6% barely two years ago.

How Does This Affect Future Growth?

Increased engagement on mobile will allow Google Inc. (NASDAQ:GOOG) to understand users’ interest better and as such, bring the idea of a personalized web into greater focus. This will enhance ad targeting, which will lead to higher clicks, and in effect, greater revenue for the tech giant. Already, Google Inc. (NASDAQ:GOOG) seems to be making headway with regard to enhanced ad targeting. In the past quarter, paid clicks increased 26% against the backdrop of continued slips in costs per click. The fact that ad prices are reducing as paid clicks increase signals greater efficiency on Google’s part.

Domination of Mobile Market Plays Key Role

Google continues to gain dominance in mobile. Data relating to the second quarter of 2013 indicates that Android now controls close to 80% of the smartphone market, up from 69.1% in the year-ago quarter. This comes even as Apple Inc. (NASDAQ:AAPL) continues to lose market share across the board. Not only did it record a 14.1% slip in iPad shipments during the second quarter, but it also lost significant ground in the smartphone market.

Android’s continued dominance essentially means that in addition to having more users, hours spent on Android devices will increase. This falls in line with the underlying strategy which is to increase hours spent, study interests and cluster users into interest-based communities. With the increased proliferation of more sophisticated interest-based communities, Google will not only improve content discovery, but also enhance ad targeting.

Conclusion

Improved ad targeting will greatly broaden Google’s revenue base. This is continually being achieved through greater user engagement on the dominant platform- mobile. In view of the formidable opportunity that the prospect of increased user engagement and personalization presents, Google Inc. (NASDAQ:GOOG) is not even half way through its growth trajectory. There is still a great upside potential for its stock.

Disclosure: The author has no position in the stocks mentioned in this article, and does not intend to initiate any position in the next 48 hours.