Alphabet Inc (GOOG)

Well run, unique capabilities. Valuation still reasonable. Headline PE around 20x, excess cash over $100M on balance sheet, no debt. Factoring out excess cash, trades around 18.5x earnings with good growth outlook. Willing to buy today.

Gen AI will continue to be a force among the Magnificent 7. Nvidia and Microsoft will remain the leaders, but the two sleepers that can outperform Apple in 2024 are Amazon and Alphabet. Apple is quality growth, which he likes, but in 2024, Apple might take a backseat to the rest of the Mag 7.

Is undeterred by last week's allegations that the company faked or exaggerated its AI demo. This remains a cheap stock at 20x forward PE. In fact, this is a growth stock.

It's a bit less than expected, so good news for everyone. As of Q3, it had around $83B in revenue, and 80% of that came from Search. So $100M here and $100M there will take care of it.

Is neither cheap nor expensive, given its amazing balance sheet and wide variety of businesses. Also, it dominates internet search. That chart since early 2022 is a big cup and a more recent small handle. If the share price breaks, it could move $45 higher.

Margins on GOOG and MSFT cloud offerings are double digit. Very profitable, generating a lot of cashflow.

Simple: they need to get their cloud platform back on track. Any growth here will push shares up. Also, would be nice if GOOG quantified their NFL advertising and how it could expand sports on YouTube.

Leader in Search and digital ads, poised to benefit from post-pandemic digital ad spending. Over 70% market share in Android smartphone market. YouTube driving volumes. Determined to be a leader in AI. Hardware sales continue to diversify revenue streams. Revenue's diversified geographically. 

Very reasonable 1.2x PEG ratio. Beat earnings and revenue. Share price is above its climbing moving averages. Forecast 18-20% earnings growth over next few years. No dividend.

We've seen these antitrust cases before. At some point, perhaps the government will be successful, but we haven't seen it yet. North of 90% of searches run through Google. Any deterioration in this would take a long time. Good for the long term. Its AI search seems to be neck and neck with the one from MSFT.

They pivoted to Cloud and did well for 1.5 years, then pivoted to NFL Football and are losing money in it, then pivoted to AI but need to invest more in it. All told, it's a cheap stock that needs to stay focused on YouTube to be worth a lot more.

Has been challenge by an anti-trust investigation and the AI race, but GOOG has the powerful YouTube franchise and internet search. They botched their conference call by not explaining with their Cloud business took a misstep. Didn't explain much of their NFL programming. Cloud should have done better. Poor conference call. There isn't anything wrong with GOOG except that cloud glitch.

They just reported numbers with Cloud revenue missing estimates and management didn't explain why. Management should have also focussed on the strength of YouTube.

Some were worried that they would lose the AI race, but they have developed AI tools. They own Android's operating system, dominate online search and have a competitive cloud business. Cash flow is huge. Acquisitions have worked well.

Owns and likes both, but MSFT gets the nod if you forced him to choose, because of its AI potential.

A lot of the trend right now is in AI, and MSFT will be the winner. They already have the platform, just increase the price and that's good for margins. Strong user-installed base that AI can leapfrog off of.

GOOG is more of an advertising company, and ads are coming back. Net margins of 25%, good growth. GOOG will have more work to do on the AI front. Given the recent price drop, there are worse companies to buy.