Alphabet: On Track To Retest $200s By Year End
Summary
- Alphabet is the cheapest of the Mag 7 by pretty much every valuation metric, except P/S, where it's trailing behind Amazon.
- I believe AI Overviews and the upcoming AI Mode are strong growth drivers for ad revenue without (this is key) disrupting Google's core search business.
- Waymo's autonomous ride-hailing business is way ahead of its competitors, achieving 250,000 rides/week and expanding operations in both the US and now abroad (Japan).
- I expect shares to retest all-time highs, as I believe the selloff was unjustified due to Google's minimal exposure to tariffs. The AI narrative is mostly intact.
- I reiterate my strong buy rating. That said, I'd keep an eye out for the fat tail risks mentioned in this article and for Google's high correlation with the S&P500.
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