Alphabet’s stock is strangely underpriced for a technology giant with a digital empire to its name. Above all, its flagship business, which is Google Search, keeps producing a stable level of growth regardless of the intensity of generative AI hype. AI is definitely the trendy thing going on, but the notion that it will overthrow Google seems more of a buildup than a fact in the world of tech. Most consumers aren’t leaving well-established search traditions for AI chat right now, and Google is wisely integrating AI into its own offerings.
If Q2 earnings are strong again, then this might be the time that the market wakes up and understands that Alphabet isn’t just managing to survive the AI transition, it’s quietly dominating it. Alphabet’s fundamentals remain good, where double-digit revenue increases with a near-50% EPS increase in Q1. These figures haven’t yet captured the potential contribution from AI incorporation on all its platforms and it’s doing well.
On the contrary, Wall Street seems to remain worried by rising AI competitors and are waiting closely for any dip in Google Search ad income. It is all possible that that generative AI will drastically revolutionize the way users experience the internet, making the traditional search engines controversial.
However, the way individuals use the internet isn’t changing that quickly. Most are simply sticking with Google because it’s working, it’s fast, easy, and something the users are already familiar with. So though the fear is dominant, the facts are still with the Alphabet, at least for the moment. Alphabet is at the critical moment of innovation and doubt. July 23 earnings may confirm the bullish case or add strength to the bear case, but all indications until now suggest resilience and not decline.
With hype usually winning over fundamentals in this market, Alphabet’s underdog position in the big tech may turn out to be its greatest strength. If the numbers remain strong, this quiet giant might finally receive the praise and a stock lift, which it so rightly deserves.
