Investment advisor Rothgarber described Alphabet Inc. as underrated compared to other tech giants, especially given Google’s recent substantial investments in AI and cloud technologies, which are on par with those of Microsoft and Amazon.
Ross Gerber considers Google “cheap” compared to AI competitors
On Monday, Gerber, who leads Gerber Kawasaki’s Wealth and Investment Management, remarked on Alphabet’s attractive stock prices while emphasizing the company’s strong foothold in AI and technology sectors.
He noted that platforms like YouTube, Waymo, and Gemini, along with Google’s core search business, suggest that Google appears undervalued against its major AI competitors.
Alphabet’s market capitalization currently stands at $2.58 trillion, making it the fourth most valuable company globally, trailing behind names like Nvidia, Microsoft, and Apple.
Google to enhance AI and cloud investments
The company has laid out ambitious plans to bolster its AI and cloud infrastructure. Just last month, Alphabet revealed a $9 billion investment aimed at expanding data centers in Virginia, covering areas such as Chesterfield, Loudon, and Prince William counties.
Additionally, in July, Google announced a $25 billion commitment focused on data centers and AI infrastructure, further reinforcing its competitive edge in the AI sector.
Alphabet has also secured a $2.4 billion agreement to license technology from various AI startups and is actively recruiting key personnel to enhance its talent pool.
Strategic collaborations between Meta and Oracle
Reports indicate that Meta formed a six-year, $10 billion arrangement involving Llamas AI models and generation tools that will utilize Google Cloud.
Oracle Corp has also partnered with Google to incorporate the Gemini AI model into its Cloud Infrastructure, strengthening Google’s position in the cloud market against competitors like Amazon Web Services and Microsoft Azure.
In its second quarter, Alphabet achieved revenues of $96.43 billion, exceeding expectations, with Google Cloud revenue up 31% from the previous year, amounting to $13.62 billion.
Assessing Alphabet’s competitiveness
Google’s forward P/E ratios, at 22.12 for GOOGL and 22.17 for GOOG, are relatively low compared to other major tech companies, suggesting that investors might be undervaluing the potential growth in AI and cloud. For comparison, Tesla shows a forward P/E of 178.57, indicating much higher growth expectations.
| Company | Ticker | Forward P/E (current) |
|---|---|---|
| googl | 22.12 | |
| Goog | 22.17 | |
| Meta Platform | Meta | 27.93 |
| Amazon | amzn | 34.60 |
| Apple | aapl | 29.15 |
| Nvidia | NVDA | 39.06 |
| Microsoft | msft | 32.79 |
| Tesla | TSLA | 178.57 |
Alphabet’s consensus price target is $211.03, based on insights from 34 analysts. The latest recommendations from Needham, Loop Capital, and Wells Fargo average around $199, indicating a potential downside of 6.46% from current levels.
Price Action: Alphabet’s Class A stock has risen by 12.4% year to date, while Class C has increased by 12.01% amidst a mixed performance from other tech giants. Over the same period, Meta is up 23.27%, Nvidia 25.88%, Microsoft 21.05%, whereas Amazon rose by 3.99%, and both Apple and Tesla faced declines of 4.80% and 11.97%, respectively.
According to Benzinga Edge Stock Ranking, GOOGL continues on a solid upward trend across various time frames.
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