Stock price when the opinion was issued
All the AI stocks are expensive. Also, the AI infrastructure is becoming vastly overbuilt and revenue from it isn't imminent. This makes them risky. It came off a perfect triple top, and that was the time to take profits.
In a bear market, it'll come down in steps and you might even see a little bounce. But don't confuse a little bounce with a new bull market. It'll be part of a broader narrative that AI stocks are going to be wiped out.
It is the least expensive of the Magnificent 7 at 18 1/2 times earnings. It has been weighed down by the tech slide and the threat by the Department of Justice to break it up. However the U.S. protected TikTok from being shut down. Also investors are worried about ChatBot eating into the search component but he feels that this is not commercial intent but more knowledge seeking. Buy 60 Hold 15 Sell 0
(Analysts’ price target is $219.72)Likes the acquisition of Wiz, the leader in cloud security. There are synergies between the two. Not clear whether Wiz now favours GOOG, or is still cloud-agnostic. Overall, more benefits than negatives.
Well positioned for the long term. GOOG invented a lot of the fundamental building blocks of AI, yet they get no credit for all that technology. The reason is that they're not good at creating commercial products. Outside of Search, all of their successful products are through acquisition -- YouTube, Android, Google Maps. So the market's wondering if it can make the transition to a generative AI future.
This helps explain why the multiple's where it's at. They could turn all this around and it would be an opportunity, but it'll probably take a change in leadership. Take a look at the history of MSFT since 2012.
Revenue miss of 9% last quarter. Market's worried about big capex in AI. Earnings up 28% YOY. Very high demand for AI products. Great company. Not expensive at 14x 2027 PE, a lot cheaper than the market. Growing ~14%. Could get cheaper, but still great value looking out 5 years. Don't go in full-scale, but buy in increments.
Normally, this is a time to buy a name like this. But people are concerned about growth, especially of advertising, if we're going into a growth scare. People are also protesting against the US and the Mag 7.
If you really want to buy this name because you believe in its approach to AI, or that concerns are overblown on advertisers not being as robust, or that Mag 7 concerns are over done, then he'd suggest (not recommend) you buy some today. Though you may be early.
Tomorrow may be a tremendous up day, or another down day. He doesn't know. Start with 10%. You don't have to be 100% right. If it's worth buying here, it'll be worth buying 20% higher or lower, assuming the Western world continues. And despite the best efforts of the US administration, it will.
There has been a lot of pressure on tech stocks with the selling to make way for the Alibaba IPO. This creates a buying opportunity. Google’s hands are in absolutely everything. She likes it. Incredibly well managed.