The group sold off last week in reaction to YouTube weakness and a miss at Google Network, seen as a reflection of a softening ad environment, Loop Capital noted.
Whether core Google should be valued at 15X earnings or 20X separates bears from bulls. Given the current uncertainties, they lean towards the more conservative 15X earnings valuation.
We think that Google will meaningfully improve its search product with genAI, but they also warned of the growing risk of erosion of query volume to other AIs.
This new competitive landscape is expected to create a 'wall-of-worry' for investors at a minimum, according to Loop Capital.
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