Alphabet Inc (GOOG)

Really likes. Makes most of $$ from advertising, but lots of other horses in the race. Always in his top 5 holdings. AI revolution costs a lot of money, and GOOG and top peers are the ones who have it. Fears that OpenAI will come up with a better Search "mousetrap" are countered by GOOG's long-standing dominance in that area. Market will still buy on dips.

Their cloud business has rebounded, but their ad business is a retail nightmare with soft numbers.

Their new AI is based on search, helping users search, but their AI will give users results instantly with far less of the user searching the internet. So, how will this impact Google's business model, which is based on searching?

Happy with it. High-bar for last earnings report, so market reaction was tepid. Good, solid earnings. Trades 20-22x forward earnings, very inexpensive when earnings will grow in mid-high teens for as far as the eye can see. Solid, will keep capital safe when markets go sideways or south.

Beat earnings, ad numbers disappointed. One quarter doesn't mean anything in the greater scheme. Buy at these levels. Can't see anyone taking away from Search, of which it has about 1/3 market share if not more. Its work on AI will benefit it. Great gross and operating margins.

They reported a fantastic quarter, but their guidance disappointed. Shares plunged nearly 8% today. Before the report, analysts were raising expectations with high projections (where did those come from?). It remains a good company. Buy this at lower levels.

Held back a bit because everyone assumed that AI would be cutting its grass on Search. However, it's done a phenomenal job bringing out new products. Other Bets are the hidden gems. Great example of harnessing AI and coming out with AI-powered tools. Buy in thirds here at $146, under $140, and low $130s. Price target of $151.50.

Excellent management team with very strong business. Will continue to own shares. Advertising business dominant with search engine strength. A.I. and cloud business also growing very well. Recent cost cutting also good for bottom line. Expecting higher productivity going forward. Will continue to own shares. Wait for pullback to buy more shares. 

Excellent business model with very high margins. Search business dominant on the internet. Very profitable advertising business. A.I. business also growing strong due to search data strength. Trading at fair multiple. Recent investment into automated driving might also pay off. 

Among the Magnificent 7, he's most worried about GOOG. This will stall if their Cloud business doesn't rebound.

Continues to dominate Search. Monetizing YouTube well. 30% share of digital advertising, a huge advantage. Will continue to do well.

Short runway to price target. If you get a pullback, you should buy it. Probably won't go below $100, but good if you could get it in the mid-$120-130s. Different from the other Magnificent 7, as 84-85% of revenue comes from ads. Cloud business, YouTube is doing fabulously well, Other Bets. Jumped into the lead with Bard and the large-language model, key in 2024.

Has done well, but still lots of potential. Leading player in generative AI. Leading Search engine. AI tools will make online advertising more efficient. Good, double-digit growth in online ads on YouTube. $20B in cash on balance sheet to invest in R&D. Lagged in cost reduction, but talk of refocusing to improve operating margins. No dividend.

Dominates Search, and with "pull" advertising (whereas META does "push" ads). Huge market share and growing. Now used as a verb, "to google". Some cyclicality. Taking share from traditional ads forms will continue. Cloud is growing nicely. AI will be additive, making most of its products more valuable. Billions spent on R&D "Other Bets", and at least some of these should pay off handsomely. 

It rallied 1.24% today when the market sold off. How to raise shares further? Replace ad sales staff with AI. (Are reports that the company is reorganizing its sales division.)  Cut loose or close down Waymo, their self-driving division; self-driving is not a home run.  Or spin off their cloud division; in their last report, cloud missed estimates. If their NFL coverage and YouTube views increase, then shares will jump. Break up the company into different companies could raise shares to $160.