Updated Rating Indicates Alphabet is Fairly Valued for Long-Term Hold
"However, all that being said, the price has increased by so much that I no longer think Alphabet is one of the best stocks to buy right now. Now, I own Alphabet stock myself. I have no intentions of selling my Alphabet stock anytime soon. I still think this stock is a great buy at current market prices, but I don't think it's one of the best stocks to buy. So, that's my big change, my big update in this video. I downgraded Alphabet stock to a buy. I had it rated as one of the top six stocks to buy, and today I'm lowering the ranking to just buy, and I updated that today."
The speaker provides an update on his rating for Alphabet, noting that despite strong performance and excellent execution in related segments, the significant price increase has eroded its status as a top pick. He emphasizes that while he remains a long-term holder and considers the stock a great buy at fair value, its appeal as a best stock to buy has diminished.
Google's Dominance in Search and AI Provides a Long-Term Growth Story
"Now, Google as well. Our Alphabet, same same thing. Google Alphabet, I think, is amazing. They have a really strong search advantage with Chrome capturing nearly 70% of the global browser market and Android running on roughly three-quarters of the world's smartphones. This distribution, combined with their push into AI search and the continued strength of their ad and cloud businesses, makes me moderately bullish on Google for the long term."
The speaker expresses a moderately bullish view on Google (GOOG), citing its dominant position in search, strong market share in browsers and smartphones, and its evolving AI initiatives. These factors underpin a compelling long-term growth narrative.
Alphabet is a Buy for Long-Term Investors
"So, I do see this as a good thing for Alphabet to be incurring debt. And I've had Alphabet rated as one of the best stocks to buy this year. And I still think that's the case. I think this is a great investment for long-term buyers. And I own the stock myself."
The speaker endorses Alphabet as a long-term buy, emphasizing that its strategic use of debt to lower its weighted average cost of capital and fund AI investments makes it an attractive opportunity. The recommendation is backed by a positive view on the stock's fundamentals and capital structure optimization.
Alphabet Cloud Beat Drives Upside
"The biggest moves to the upside are coming from the likes of Alphabet. You got to keep an eye on those class C shares. Go OG is your ticker, trading at $295 share, higher by about 7.3% this morning. Alphabet coming in with a very strong beat on their cloud unit and this is a very big deal. They are the number three player in a market that is very much dominated by Microsoft's Asia business and Amazon Web Services. So the fact that Alphabet is not only growing but gaining market share is kind of a double uh win. So the market really applauding that this morning. 295 is where we are."
The speaker highlights Alphabet's robust cloud performance and market share gain, noting its strong earnings beat and a notable 7.3% price increase. The commentary emphasizes Alphabet's competitive positioning against Microsoft and AWS.
Positive Catalyst for Alphabet via Specialized AI Chips Deal
"All right, so Alphabet will supply up to 1 million of its specialized AI chips to Anthropic. A deal worth tens of billions of dollars that deepens its partnership with the fast growing AI startup. I did not expect this deal to be this large. So really, really positive news for Alphabet. Not only does it get tens of billions of dollars in revenue, but it also gets to scale up the manufacturing, which will lower the cost per unit and improve its competitive positioning against rivals like Nvidia."
The speaker highlights a transformative deal where Alphabet supplies specialized AI chips to Anthropic, a move that could generate tens of billions in revenue and enhance manufacturing scale and cost efficiency. This deal is seen as a significant catalyst that improves Alphabet's competitive stance in the chip market and offsets other business pressures.
Buy Call on Alphabet Over Rally
"I ranked Alphabet stock as one of the best stocks to buy this year. So hopefully you saw that research and uh came to a similar conclusion as Alphabet stock has rallied. Now it's trading at a forward PE ratio of 25. It's about in the middle of where this stock has traded for according to this valuation metric going all the way back to 2016. So if you're interested in this kind of data, fisc.ai has this and much much more."
The speaker explicitly calls Alphabet (GOOG) one of the best stocks to buy, citing its current forward PE ratio of 25 which aligns with its historical valuation range. The commentary implies a bullish stance as the stock has rallied and data support from fisc.ai is noted to back up the analysis.
Bullish Commentary on Alphabet's Growing Cloud Revenue
"Okay, so I've highlighted here in their most recent quarter which ended June 30th. That's the most recent data we have available for Alphabet and their Google Cloud Business. In the same quarter that ended last year, they generated $10.3 billion in this segment, which increased to $13.6 billion most recently—a roughly 30% growth year-over-year. To put that into comparison, Amazon's web services increased by around 17%. Even though Google Cloud is still a small part of overall profitability, this deal could add north of $2 billion annually, making it great news for Alphabet stock investors."
The speaker outlines strong growth in Alphabet's Google Cloud segment with a 30% year-over-year revenue increase. He highlights the potential for a multi-year deal that could boost annual revenue by over $2 billion and compares these gains to Amazon's lower growth rate, establishing a bullish case for Alphabet.