Google: Core Services In Focus As AI Threat Fades
Summary
- Google is showing a strong growth trajectory in the core search business segment, which shows an effective moat against new AI competition.
- Prior to the launch of ChatGPT, the Google Search segment reported close to $40 billion in revenue in Q3 2022, which increased to $49.3 billion in Q3 2024, or 25% growth.
- Google will likely face a bigger threat due to rapid growth in digital advertising market share by other players like Amazon, TikTok, and other players as advertisers gain greater options.
- Rapid revenue diversification away from search is the most promising trend for Google as cloud subscriptions.
- Google’s EPS estimate for the fiscal year ending Dec 2026 is $10.16, giving it a forward P/E ratio of only 19, which makes it one of the cheapest big tech stocks at the current price.
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