Why GOOGLE is Getting TOO CHEAP to Ignore!

Summary

In a recent video, the speaker discusses the overvaluation of the stock market, particularly highlighting Google as a potential buying opportunity despite its 14% decline from 52-week highs. The discussion centers on ongoing antitrust lawsuits facing Google and other major companies, outlining possible outcomes, including the breakup of Google into separate entities. Despite concerns over competition, the speaker emphasizes Google's strong market position, diverse revenue streams, and potential for growth, suggesting that the current valuation of 20 times earnings offers more upside than downside, making it an attractive investment for risk-takers.

Takeaways

• 😀 The stock market is generally overvalued, but there are still some buying opportunities, particularly with Google.
• 📉 Google stock has risen 177% year-to-date but is currently down about 14% from its 52-week highs due to antitrust lawsuits.
• 🔍 Approximately 43% of S&P 500 companies are under investigation for monopolistic practices, including Google and other major firms like Meta and Amazon.
• ⚖️ Potential outcomes of the antitrust lawsuit include the possibility of breaking up Google into separate companies, which may not be as harmful to shareholders as anticipated.
• 💵 Google pays Apple $20 billion annually to remain the default search engine on Safari, a contract that could be terminated amid the lawsuit, potentially saving Google significant costs.
• 🌐 Google maintains over 90% market share in search, making it difficult for users to switch to alternatives like Bing or Yahoo.
• 📺 YouTube generates substantial revenue for Google, with around $31 billion, and is the second largest social media platform with 2.5 billion users.
• ☁️ Google Cloud is steadily gaining market share, now around 12-13%, and is becoming more profitable, which supports the company's overall growth.
• 📈 Despite competition from AI like ChatGPT, Google's size and established presence make it resilient in the market.
• 💡 The current valuation of Google at 20 times earnings reflects negative sentiment, but there is a greater potential for upside surprises compared to downside risks.

Q & A

Why does the speaker believe the stock market is overvalued?

The speaker believes the stock market is overvalued due to the high prices of many stocks, particularly in the large-cap sector, despite acknowledging that there are still a few buying opportunities.

What specific company does the speaker identify as a potential buying opportunity?

The speaker identifies Google as a potential buying opportunity, despite its year-to-date increase of 177% and a 14% decline from its 52-week highs.

What is the primary reason for Google's stock decline?

Google's stock is declining mainly due to an antitrust lawsuit, which has created uncertainty about its future operations and potential penalties.

What percentage of the S&P is currently under investigation for antitrust issues?

43% of the S&P companies are under investigation for some form of monopolistic accusations or antitrust issues.

What is one potential outcome of the antitrust lawsuit against Google?

One potential outcome is that the court may require Google to terminate exclusive agreements, such as its $20 billion contract with Apple to be the default search engine on Safari.

How does the speaker view the impact of terminating the agreement with Apple on Google?

The speaker believes that if Google terminates the agreement, it may be more detrimental to Apple than Google, as it would save Google $20 billion per year.

What other revenue sources does Google have besides its search engine?

Besides its search engine, Google has significant revenue from YouTube, Google Ads, Google Play, and Google Cloud services.

How has Google Cloud's market share changed over time?

Google Cloud's market share has steadily increased from around 7% to approximately 12-13%, indicating growth despite competition from Microsoft Azure.

What is Google's current valuation based on earnings, and how does this impact the speaker's view?

Google's current valuation is at 20 times earnings, leading the speaker to believe that there is more potential for positive surprises than negative outcomes given the negative sentiment currently priced into the stock.

What is the speaker's overall sentiment regarding investing in Google?

The speaker is optimistic about investing in Google, seeing it as one of the best buying opportunities among large-cap stocks, despite the risks associated with the antitrust situation.