We recently published a list of Top 10 AI News You Should Pay Attention To. In this article, we are going to take a look at where Alphabet Inc (NASDAQ:GOOG) stands against other top AI news you should pay attention to.
LinkedIn co-founder Reid Hoffman said in a latest program on CNBC that the DeepSeek breakthrough was not “news” for him and maany tech insiders as he believed sooner or later more efficient models would be launched. However, he sees China’s rise in the AI race as surprising:
“I do think that the thing that is news is, well, look, as we’ve been saying, China is in the game. This is actually, in fact, a game-on competition, and it was resoundingly demonstrated that way. There is good, useful work that comes out of it.”
The tech investor believes efficiency will lead to more use cases and usage:
“Say, for example, you can train a model on a thousand GPUs, but you can make it much better on 10,000 GPUs. You will, in a lot of cases, always spend for the 10,000 GPUs or the 100,000 GPUs because if your coding model is even 20% better with that and you think that there are billions of people who could be using and engaging with that around the world, that’s actually worth it at that kind of cost. So, the fact that you’re trying to do efficiency — that’s a good thing. All of the American companies will also get to points where they’re focusing on efficiency. I think there are things that we can learn from some of the stuff the Chinese are doing.”
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Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 160
Mark Mahaney, Evercore ISI head of internet research, said in a latest program on CNBC that Meta is always better than Alphabet when it comes to PR and giving clarity on guidance and expectations. However, the analyst believes Alphabet is a “black box” when it comes to guidance and forecasts. Nonetheless, Mahaney says he’d prefer Alphabet Inc (NASDAQ:GOOG) as an investment over Meta Platforms.
“Google is always consistently a black box. I give them credit for giving us their capex guidance for the full year, but that was an outlier, and therefore, the street was caught disappointed and by surprise. Also, the cloud numbers were a little disappointing too. But I do think part of it is that Meta actually does a great job of communicating to investors what its investments are going to be, and it’s giving you great revenue growth—2x that of Google. All that said, right here, I probably would prefer Google. I just think there’s more room for the narrative to change, more room for the multiple to go up. I like both assets, but I have a slight preference for Google.”
Alphabet Inc (NASDAQ:GOOG) shares slipped following the company’s latest quarterly results. The market was spooked by the massive $75 billion Capex guidance for 2025. However, GOOG bulls believe these investments will pay off in the long term. The company needs to spend to maintain its dominance in search. Its Gemini model has an edge over competitors because of the huge ecosystem Alphabet Inc (NASDAQ:GOOG) already has. For the end user, it’s easier to switch from traditional search to Gemini instead of moving to a completely new app like ChatGPT or Perplexity. So far AI competition hasn’t dented the company’s search revenue.
In the fourth quarter, Alphabet Inc (NASDAQ:GOOG) operating margin rose 32%. YouTube ad revenue jumped 14% and Cloud revenue skyrocketed by 30.1%. Google raked in $12.8 billion in FCF, marking a roughly 215% growth compared to the same period last year, despite heavy investments in AI. The stock has a forward (2026) P/E ratio of 20.8x, which makes it about 22% cheaper than the average company in its sector.
Merion Road Capital Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG): We have held GOOG for a long time (since 2018) on the basis of its immense business quality paired with an undemanding valuation, improving treatment of minority shareholders, and multiple options for value creation. Recently we have seen Alphabet bashed for losing the AI race to now heralded for its progress. I remain excited about their prospects with several near-term, mid-term, and long-term tailwinds. Near-term, Google Cloud continues its rapid growth and their latest large language model, Gemini 2.0, appears to have made significant progress to better serve consumer needs and improve GOOG’s other product offerings. Mid-term, Waymo is on the cusp of becoming a real value driver for the company; there are abundant articles discussing Waymo stealing share from the ride-share economy and launching in new geographies. Long-term, GOOG’s recently announced quantum computing chip positions it well for a future (many, many years away) where computing process are fundamentally different than today. All of these options are embedded in a company that already has an established and dominant earnings stream.”
Overall, GOOG ranks 2nd on our list of top AI news you should pay attention to. While we acknowledge the potential of GOOG, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GOOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
