Alphabet: Overhype In AI Headwinds As Non-Search Revenue Share Increases Rapidly
Summary
- Google continues to face doubts over its moat as new AI search platforms gain popularity.
- However, Google’s moat is based more on the sales and operations infrastructure with offices in over 50 countries compared to its search algorithm.
- The holy grail of AI search is monetization, and Google has a longer expertise compared to newer AI search platforms.
- The non-AI revenue streams like cloud, Waymo, subscriptions, and YouTube continue to show good YoY growth with an increase in their revenue share.
- Google is trading at only 17.7 times the EPS estimate for the fiscal year ending Dec 2025, compared to 27 times for Apple, despite a higher EPS and revenue growth trajectory.
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