Alphabet Inc (GOOG)

Very positive outlook, based on generative AI trend. The most controversial of the Mag 7, as AAPL reported yesterday that search queries are down for the first time ever. That struck a negative tone on GOOG. Over time there may be more competitors, and pricing may have to come down. Trades at only 15x earnings, good value here at $150-155.

They won't sit still (and could buy a competitor), and Gemini is highly respected, but the company hasn't promoted it well. There is opportunity, but most of their revenue is coming from traditional advertising on Google search--that's a problem. YouTube is fantastic generating lots of ad revenue. Also, how do you make money off chatGPT? Maybe this problem is already priced into GOOGL, since its PE has come down.

He just trimmed. How often are you using Google search vs. chatGPT (85/15 for him). Ad dollars will decline within Google. He wanted to reduce his overweight in GOOGL and hang onto a little. Are lots of reasons to like GOOGL, still because of lots of other businesses, but search is their golden egg.

Might be affected on today's news that AAPL will be adding some AI-search capabilities to its browsers. Still likes it. Down 27% from highs earlier this year. Still above 200-week MA, which is moving higher. Winner long term. Trades at 18x forward PE for 13-14% EPS growth. Embedding AI solutions across its ecosystem. Still the leader in digital advertising, cloud continues to grow. There will be choppiness against expectations.

While there will be continued competition in AI, this name has so many engines for growth. Not going anywhere.

He just heard the news, so he is avoiding a knee-jerk reaction either way. He is holding on for now. His position is not set in stone. This isn't the first threat to Google.

This is huge news. Search is their cash cow, their primary business. The concern over recent years is that Google is not moving fast enough to fend off competition. Maybe the best outcome is that Alphabet split into businesses. They will have to innovate and evolve to replace that search cash cow, and he thinks they can do it.

He sold it recently. This news is very significant. Google won't disappear--they have a steady business--but the duopoly Google shares with Meta in internet ads is in question. This is a watershed moment. For the first time, Google is competing in core search, particular AI which are growing better and complex, yet easier to use and attracting a younger user. Also, Google faces a problem in travel search declining from less traveling and tariffs. It's been said that travel search accounts for 13% of Google searches.

Search is 57% of their revenue. If such revenues decline, Google won't be able to invest in anything else but search.

Pretty well a value stock. You can go ahead and buy this one.

The Mag 7 name he likes going into the second half of the year. Search is still extremely popular even though everyone was worried about AI. At the front of the line when it come to innovation in AI. So many other horses in the race. 75-80% of revenues come from ads; so a recession would definitely hurt, but that seems to be off the table for now as the S&P 500 "death cross" has recovered for now.

One of the cheapest tech companies around, trading well below market multiple. Search, YouTube, and cloud all grew last quarter. Next quarter will be telling as to where capex will be focused -- continue on AI or not? FTC lawsuit is an issue.

Always a concern when you're being sued by the US government. Have to see what evolves, GOOG has already said it will appeal, will play out over a number of years. Headline risk is an overhang. Capex for data centres will increase by 40-50%, a surprise to the street.

Cloud grew 30% YOY, healthy, but expectations were for 32% or so. Stock came off. And now the market selloff, which is focused on large-cap tech. Trading at 17x forward PE. Consensus that EPS can grow in the 14-15% range. If earnings can hold, the multiple is very attractive (actually less than the S&P). Reports this week. She'd buy here with new money.

His largest holding. Customer does all the work and the company gets all the money. Ads have taken a hit. Regulatory scrutiny is a target on the successful; first it was IBM when he started out, then MSFT. It's rather like getting the Good Housekeeping Seal of Approval ;)  

Could be hurt by lawsuits, but it'll be minor. AI will drive growth for the next 10 years.

A name in tech that continues to make sense because of strength and scale. Trading close to its 200-week MA, a very important long-term support level. If it bounces off that, will do very well. Paying 17x PE for 12% earnings growth, not really expensive for a name like this. 

Giant in Search; AI is in early stages and can only improve their products. Cloud business growing quickly. Hardware space is growing too.

It will recover. Whether that's in 2025 depends largely on what the rest of the market does. Its business plan is changing. AI is really taking over from the Search model, and the market sees its market dominance in that area declining. They'll have a share, but we don't know how much.

Has other initiatives, like YouTube, that are real money makers. 47% of people who use the internet go to YouTube once a month or more. A very good hold at current valuation of ~mid-high teens PE.