Alphabet is a leading force in online search, digital advertising, and video streaming via YouTube, while Android powers many smartphones globally. Google Cloud has become profitable, nearing a $50 billion annual revenue run rate. Despite robust revenue growth, Alphabet's stock has lagged against the S&P 500 and rival tech firms like Microsoft. Its stock is currently affordable, trading under 19 times forward earnings. The company faces antitrust lawsuits that threaten its core business by potentially requiring divestiture of significant assets, raising investor concerns about future revenue from its advertising ecosystem.
Alphabet has long dominated online search and digital ad spending. YouTube accounts for nearly 10% of all U.S. TV viewership. Android powers most smartphones.
Despite solid growth, Alphabet stock has underperformed the S&P 500 and other tech giants. It trades for less than 19 times forward earnings compared to around 30 for Microsoft and Apple.
Alphabet's stock is currently seen as affordable, but investor caution is warranted. Antitrust lawsuits around the world pose a significant threat.
The DOJ's ruling against Google may force divestitures in online advertising technology, potentially impacting vital business segments like Chrome and Android, thus affecting advertising revenue.
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