Alphabet Inc (GOOG)

AI is still in very early stages. We don't know who the leaders will be in 10 years. He has no concerns that GOOG won't be one of the 2 or 3 companies that will lead the AI market, just given what they do. Most of its revenues come from digital advertising, and that business will continue to grow.

AI is not a large part of its revenue at this stage. It needs to grow that segment as do other tech companies.

Bread and butter is advertising. Founder is still involved in the business. Compounds shareholder wealth over the long term at elevated rates, and this will continue.

The 2 mega-cap tech stocks he owns are MSFT and META, both of which he thinks are better businesses than GOOG.

There is a potential threat to their search engine dominance from AI search engines which do all the searching for you just from one key word, giving a concise response with no ads. It is in an innovative dilemma. OpenAI and ChatGPT have one of the fastest adoption rates ever. It could soon release its own search engine. He owns it since it trades at a reasonable valuation and has other strengths such as Google Maps. Be wary of it though, since 80% of the revenue comes from advertising.

Dominant in Search, but more of an AI name these days. Gemini large-language model has been doing great things. Has lots of data to use with AI. Ton of free cashflow.

Recently broke out above important resistance levels. Bullish case, but close to overbought. Potential near term for a drawdown. Very good earnings recently. Continues to dominate the online advertising space. Diverse revenue streams. Will be part of AI in the future. He continues to add, likes it long term.

Looking good from a fundamental and technical perspective. Need earnings to make a stock go higher, and they happened to report earnings that surprised to the upside. Can be a core holding, so hold and look for good entry points to add rather than trading too aggressively. You could put fresh money in now.

No, don't, though MSFT has had a very good run. In general, if feel that a stock has run too far, taking some money off the table is never a bad idea. You will pay some tax, though, but will de-risk your portfolio. Trim, don't sell.

GOOG reported strong growth in its Q1 earnings, particularly in the cloud division. It is proving that companies can spend money on AI and still see net gains. It also announced its first-ever dividend and a large stock buyback. Results in most metrics were well above expectations. 
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GOOG reports tomorrow. Interesting in how GOOG frames the whole Gemini offering in AI. Gemini stumbled, but has now come back into fad. So you could look to add that one.

It reports Thursday. Trades at 22x PE. He's been taking off shares because it performs so badly when it typically reports.

Broad market driver now is AI. To benefit from, and optimize, AI, you need data. Only the Mag 7 have massive data. Play on digital advertising. A bit more essential than META. Both have a fairly reasonable valuation, though META is a bit more of a value play right now. Above his buy price right now, wait for pullback.

Lots of noise in the last year. Remember, pre-eminent Search tool in the world, a franchise it wants to protect. Working hard to use AI to maintain that leadership. Low 20s multiple, growing in high teens to 20%. Buyable well into the future. Exciting prospects. Very strong GARP. Risk: 90% market share possibly in jeopardy due to new technology.

Build it into your portfolio, but don't get carried away.

He's change his tune on this, based on today's analyst notes. It's lost no market share in internet search and ad revenues remain robust. YouTube continues to explode, worth a third of Alphabet; 71% of teens use it everyday. Also, their new live NFL streaming will generate an attractive return through ads. Google Cloud will grow even more. Google continues to research areas we don't hear of, such as mapping proteins. Trades at a cheap 16x 2024 PE.

Keeps providing value to investors. Just off all-time highs right now, but it's not expensive. Years ago, it was far and away the AI leader. But then MSFT acquired OpenAI. Generative AI is probably leaning toward OpenAI. This is a problem, needs to be addressed. 

All pieces are there for them to win the AI arms race: best access to resources like research and hardware, some of the best internet infrastructure in the world, amazing consumer data. He wants them to focus on AI. They just need to do it. Tremendous value here. No dividend.

Like much of the market, it's overbought. Better to buy it at $143, its 50-day moving average. He just trimmed this yesterday. Growth rate is great at 12-15% and 20x PE. Obviously, are the search engine king and YouTube is doing well. AI is burgeoning. Likes it.