'We Should Have Seen It'

Summary

• Alphabet’s rollout of AI Mode and Gemini signals a major strategic shift, but its core search business, still immensely profitable, is both the foundation and the friction in navigating the AI transition.
• Despite growing investor fears about AI disruption, early data shows AI Overviews boost user engagement and monetize on par with traditional search, suggesting Alphabet’s pivot may enhance rather than erode its dominance.
• With a forward P/E of 17.6x and trailing five-year earnings growth of 25.3%, Alphabet trades at a rare discount among mega-caps and offers potential upside for investors focused on quality growth strategies like QGRW.

Thapana Onphalai

By Christopher Gannatti, CFA

“We were using it and paying for it—we should have realized how powerful it was.”

—Charlie Munger, recalling early impressions of Google Search at a Berkshire Hathaway annual meeting¹

When Charlie Munger and