"Alphabet's Google has billions of people worldwide who use its services like Search, Gmail, and YouTube every day. It generates loads of cash from advertising revenue that is fueling investments in artificial intelligence (AI). You would think a business in Google's competitive position would trade at more than 23 times next year's expected earnings. This is a lower price-to-earnings multiple than the S&P 500, which makes Alphabet an incredible value right now."
"More people are using AI models like OpenAI's ChatGPT, which some investors believe could be a substitute for traditional search engines like Google's. It appears OpenAI is taking aim at Google after it recently partnered with Walmart in its effort to turn ChatGPT into an intelligent shopping assistant. But this risk might be overblown. Alphabet reported that people are searching more often since it rolled out AI Overviews last year."
The tech-focused Nasdaq has outperformed other major indexes, and leading tech companies still present value opportunities. Alphabet benefits from billions of daily users across Search, Gmail, and YouTube and converts advertising revenue into AI investments. Alphabet trades at about 23 times next year's expected earnings, a lower multiple than the S&P 500. Concerns about AI models substituting for search have weighed on valuation, but AI Overviews have increased search frequency and boosted Search advertising. Google Cloud operating profit more than doubled year over year in the second quarter. Dell Technologies now derives most revenue from servers and services amid booming demand for AI-optimized servers.
Read at The Motley Fool
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