Opinions
Shane Obata
Alphabet Inc
GOOG-Q
PAST TOP PICK
May 29, 2025
Stock price when the opinion was issued
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Premium contentGoogle's revenue for the last quarter was $96.4 billion. This represents a 6.86% increase compared to the previous quarter, which demonstrates a positive short-term growth. Year-over-year, this is a hike of 13.79%, suggesting solid long-term growth. Social media mentions are up 87.2% in the past 24h.
Some regulatory risks have now lifted. Still a decent valuation of 23x forward PE, discount to mega-cap peers. Continues to dominate digital ad space. Applying generative AI across the board. Cloud's a bit behind MSFT and AWS, but the entire space is growing so revenues are too. $100B in cash reserves gives lots of options.
It has been allowed to keep Chrome so that decision is good for the company. The legal system in the U.S. can't keep up with the fast pace in the market place, especially tech. The anti-trust laws were created over 100 years ago. Google hasn't raised or lowered prices and lots of it is free.
A 2 to 3 year timeline is the sweet spot for a long term investor. It is generally easier to form a thesis over three years. Acceleration is remarkable and no case has been made for a monopoly. Google can compete on the AI front and there is not as much focus on the search component. The value of the sum of its parts is greater than people realize.
Mixed feelings on this one. Warning: rant ahead. Years ago they thought (and still sort of think) that GOOG had all the pieces to win AI. Lots of platforms and good data. Difficulty is that may not matter because it needs to figure out where it's going to fit in AI.
ChapGPT has become synonymous with AI, and you could argue it's won the consumer subscription game already. Doesn't see anyone displacing MSFT on enterprise solutions; he tried Copilot, and it's still bad, but that doesn't matter because we're all held captive. MSFT is set to win enterprise AI as its AI improves over time.
So where does GOOG fit? He's a big Google fan, and the only person he knows with a Pixel phone. Search is the crown jewel, and such a big part of the overall business. Will they have to cannibalize themselves to win in AI? Competition has never been higher for Search. Older folks say "googling", but young people don't. They "search", and they don't care where they're doing it.
Can still deliver decent results, but the multiple will be capped at the very least. Cheap at the surface level, but there are reasons for that. He's still comfortable holding. Great job in Gemini, for example, but it needs to be monetized. Fun fact: Between ads and subscriptions, YouTube is bigger than NFLX.