Stockchase Opinions

The Monthly Gems by Allan Tong Alphabet Inc GOOG-Q TOP PICK Aug 04, 2025

Highlights from their July 23 report: sales of $96 billion, up 14%' operating margins of 32%, flat year over year; Google Cloud expanded revenues by 32% as AI-driven demand for cloud infrastructure remained solid; YouTube ad revenue rose 13% to $9.8 billion; and Google Search grew 12% year-over-year, up from 10% growth last quarter, despite the rise of chatGPT. Other metrics in its favour: 20.87x PE, lowest among the Mag 7 and far from the S&P's 25.9x, and a beta of 1.0, calm for a megatech company.

$195.160

Stock price when the opinion was issued

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BUY

Is trading at a valuation discount to peers, because we all know they will lose their monopoly in internet search. But people are staying in the Google ecosystem to use their free AI. Also driving them are YouTube and Waymo. He expects their next earnings to impress.

HOLD

The only thing to be a bit aware of is that the chart might be making a head-and-shoulders formation, which can be bad (though he's not saying it is). Does appear to have broken a point of resistance. At this point, it's at least a hold; not sure he'd be piling more in. Chart's a 7/10.

DON'T BUY

Doesn't own it, because there's a forecast of a 25% drop in 2026 in single search engine queries. In contrasts, Meta has 90% margins in their single search engine queries. Even if GOOG does well in AI and cloud, those are not as profitable as the main search business. Decent earnings growth ahead, but their earnings are more at risk. Instead of Google, she uses chatGPT and other methods to search.

BUY

It's about digital ad sales coming back and Google cloud being strong. He expects a really good quarter today.

BUY

The street expects 11% and 16% revenue and earnings growth. Long-term, GOOG is the most vertically integrated to win. Think of Gmail, Google calendar, YouTube and Google search. Google has all our data and can make a powerful AI assistant. The key thing is how GOOG will monetize their AI (whereas Meta has made that clear).

BUY
Which Mag 7 is going to weather the storm?

The numbers reported this week were really good. YouTube pulled in $10B in ad revenue. Holds assets it hasn't even monetized yet. Search is at risk, and the multiple reflects that. He's watching all the AI plays to see how they monetize.

He'd pick this one, for at least a trade. Only one of the Mag 7 below the market multiple.

BUY

In his momentum mandate. Reported 2 days ago and beat on sales, earnings, and other key performance metrics. Earnings up ~22%, sales up 15%. Acceleration of cloud computing, now ~$50B a year and probably the fastest-growing part of the business. Stepping up capital spending on the AI arms race, yet also authorized to buy back $70B in stock. Very cash-generative.

Trying to get its head around monetizing AI in Search, and he thinks they will.

HOLD

A favourite among the Mag 7.

BUY

He just bought it, owning six of the Mag 7. Momentum hasn't been this strong since Q4 2023.