Although considered a laggard in AI innovation recently, Google's parent company Alphabet presents a significant value opportunity with a P/E ratio of about 19, making it the cheapest among the 'Magnificent Seven' stocks. Despite having contributed to AI since 2001, perceptions have shifted following the rise of tools like ChatGPT, which altered user interactions with search engines and advertising. Users may now obtain information directly through generative AI without visiting sources, undermining Alphabet's traditional revenue model from ads, yet this creates a compelling investment scenario for the company.
Today, perceptions are much different. It now sells at a P/E ratio of about 19. That makes it the cheapest stock in the 'Magnificent Seven,' and many investors would now consider it a value stock.
Although it responded by launching Google Gemini soon after, Alphabet appears to lag ChatGPT competitively.
Unfortunately for Alphabet, generative AI platforms like ChatGPT merely return information often compiled from multiple sites. While some users may still visit the sites from which AI platforms source material, many users never go to the sites.
In fact, investors might be surprised to learn that many of these stocks do not command premium valuations, and that lack of buying has made the opportunity particularly compelling in one stock.
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