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Google Q4: A PayPal Moment

2023-08-11

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It was one of the most innovative companies in the space, but despite steady growth and profitability, the stock and company have not performed as one might have expected.Indeed, PayPal became entrenched in its ways, and the competition in the space became fierce. GOOGL now runs a similar risk. The company may have become too big for its own good, lacks a clear vision and is under threat from new competitors.There are certainly so","content":"<html><head></head><body><ul style=\"\"><li><p>Alphabet/Google&#39;s Q4 earnings disappointed investors with lower-than-expected ad revenues, causing the stock to drop over 7%.</p></li><li><p>Despite concerns about Google&#39;s lack of innovation and clear vision, the company still dominates the search market and leverages AI in its products.</p></li><li><p>Google&#39;s solid performance, commitment to development, and undervaluation make it a strong investment with long-term potential.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d2ea3525551a78da30e115d08dcb4ae5\" alt=\"Wirestock/iStock Editorial via Getty Images\" title=\"Wirestock/iStock Editorial via Getty Images\" tg-width=\"750\" tg-height=\"500\"/><span>Wirestock/iStock Editorial via Getty Images</span></p><h2 id=\"id_905242568\">Thesis Summary</h2><p><strong>Alphabet Inc.</strong> (NASDAQ:GOOGL) has just reported its Q4 earnings, and the stock is down over 7% after disappointing investors with lower-than-expected ad revenues, even though the company beat on both EPS and overall revenue.</p><p>It would seem that many investors have written off Google, since the artificial intelligence (&#34;AI&#34;) mania has taken place. Sure, this presents many challenges but also opportunities.</p><p>I see some interesting similarities between Google and <a href=\"https://laohu8.com/S/PYPL\">PayPal</a> Holdings (PYPL), which I recently covered here. PayPal, too, is a large and established company with reasonable growth, good profitability and a fair valuation.</p><p>But like PayPal, investors fear that the company is failing to innovate and that this could lead to its displacement from its core market.</p><p>Of course, I strongly disagree with this thesis. GOOGL still holds a firm grip on the market. However, a new sense of direction, or perhaps even just an actual sense of direction, would certainly serve to renew investor confidence.</p><p>Overall, I remain of the opinion that GOOGL is still the best of the magnificent seven.</p><h2 id=\"id_2400518\">The PayPal Dilemma</h2><p>In my last article on Alphabet, I discussed the Q3 earnings. Back then, investors also found a reason to sell Google, even though guidance was beat. In Q3, it was the lack of cloud growth, and now it seems to be the slowdown in ad growth.</p><p>However, it’s worth mentioning that the stock has outperformed the market since that last report, up over 12%.</p><p>The latest earnings and earnings call give us some more clear insights into what’s going on at GOOGL and what the plans are for the future. I remain of the opinion that the coming years will present many opportunities for GOOGL. But will the company be able to capture them?</p><p>Ten years ago, PayPal was at the heart of the fintech revolution. It was one of the most innovative companies in the space, but despite steady growth and profitability, the stock and company have not performed as one might have expected.</p><p>Indeed, PayPal became entrenched in its ways, and the competition in the space became fierce. GOOGL now runs a similar risk. The company may have become too big for its own good, lacks a clear vision and is under threat from new competitors.</p><p>There are certainly some similarities but also some stark differences, but before we get into this, let’s look at the latest earnings.</p><h2 id=\"id_2986157319\">Latest Earnings</h2><p>Google beat on revenue and EPS, but the stock is still down over 5%. Let&#39;s look at the breakdown in revenues and operating income to get a better idea of what’s happening.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/351c16701cea5b035c160b9bad528814\" alt=\"Google Income Statement (Earnings Release)\" title=\"Google Income Statement (Earnings Release)\" tg-width=\"1280\" tg-height=\"954\"/><span>Google Income Statement (Earnings Release)</span></p><p>As we can see, Search revenues grew by a little under 12% YoY. YouTube ads continued to show strong growth—however, Google Advertising revenues overall came in slightly below what analysts were expecting, $65.5 billion versus $65.8 billion.</p><p>Quite surprising was the sudden uptick in Cloud revenues, which, as mentioned above, became a point of concern in the last quarter but, on this occasion, increased over 25% YoY.</p><p>Finally, as we can see, GOOGL did even better at increasing its overall income relative to revenues. However, overall income from operations was reduced by the higher than usual costs associated with “Alphabet-level activities&#39;&#39;:</p><blockquote><p>Alphabet-level activities included charges related to the reduction in force and our office space optimization efforts totaling $1.2 billion and $62 million in accelerated rent and accelerated depreciation.</p></blockquote><p>Source: Earnings Release.</p><p>Overall, this is still a pretty solid performance for the company, in which I would highlight the increase in profitability over the year:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/51514d7e8f9b1823b65dd1c948f98b43\" alt=\"Revenues, OI and EPS (10K)\" title=\"Revenues, OI and EPS (10K)\" tg-width=\"1260\" tg-height=\"794\"/><span>Revenues, OI and EPS (10K)</span></p><p>While overall revenues rose 9%, operating income increased 13%, and we saw diluted EPS increase by 27% compared to 2022.</p><h2 id=\"id_1484054483\">Insights From The Earnings Call</h2><p>A lot of the issues raised by investors were discussed in the earnings call.</p><p>Firstly, over the “concerns” that Google Search may be affected by AI.</p><blockquote><p>Thanks, Justin. First of all, look, we think about effects on Search, obviously, more broadly. People have a lot of information choices. So -- and user expectations are constantly evolving. And so we&#39;ve been doing this for a long time. And I think what ends up mattering is a strong, continuous track record of innovation.</p><p>Obviously, generative AI is a new tool in the arsenal. But there&#39;s a lot more that goes into Search: the breadth, the depth the diversity across verticals, stability to follow through getting actually access to rich, diverse sources of content on the web and putting it all together in a compelling way.</p></blockquote><p>Source: Earnings Call.</p><p>As Sundar Pichai explains here, AI is only one of many factors that can improve and influence search. No doubt, it is a factor that GOOGL will have to strive to introduce, and keep innovating in, but Google’s search, still holds an advantage, so to speak, due to its breadth and depth.</p><p>We also got some insight into the re-acceleration of cloud:</p><blockquote><p>Thanks, Mark. On Cloud, let me take that. First of all, a combination of factors. I think definitely excitement around the AI solutions on top of our foundational pillar with data and analytics, infrastructure, security, et cetera. But AI is definitely something which is driving interest and early adoption. And as you saw, that greater than 70% of Gen AI unions are using Google Cloud. And so I think it&#39;s an area where our strengths will continue to play out as we go through &#39;24, especially when I look at innovation ahead from us on the AI front. And second, I think there are regional variations, but the cost optimizations in many parts are something we have mostly worked through. And I think that was a contributing factor as well.</p></blockquote><p>Source: Earnings Call.</p><p>It looks like AI has been directly responsible for helping boost Cloud demand. The implementation of AI tools into Cloud has greatly increased the value offering.</p><p>Lastly, here is some good news with other bets:</p><blockquote><p>With regard to Other Bets, we&#39;ve been working to sharpen our investment focus while capturing the upside given compelling technology breakthroughs across the portfolio. For example, last week, Alphabet&#39;s X announced that it would be moving to spin out more projects as independent companies through external capital, giving X the opportunity to bring more focus to the breakthrough technologies it is working on to address some of the world&#39;s most pressing challenges.</p></blockquote><p>Source: Earnings Call.</p><p>I like this idea of spinning out more projects into separate companies. Google certainly has enough on its plate with its core offerings. This shows discipline and a commitment to focus on what got the company this far.</p><h2 id=\"id_853159350\">Future Outlook</h2><p>Based on all of this, I continue to be very bullish on the company, and I do not agree at all with those who characterize Google as being a “dinosaur” or those who believe the company is being displaced.</p><p>Yes, there are challenges but also many opportunities, and I don’t think it’s fair to compare Google to a company like PayPal, for example.</p><p>Firstly, Google still absolutely dominates the search market, with over 83% search volume as of the latest 2023 data. That’s still remarkable and much more than what PayPal ever had in the payment market.</p><p>Secondly, the situation with AI is very different here. As it has been made clear, AI is something the company is also leveraging and is already having an impact on Google Cloud and also in the development of Gemini and Search Generative <a href=\"https://laohu8.com/S/EXP.AU\">Experience</a> or SGE. Google’s products cannot be undercut, like transaction fees.</p><p>And lastly, even though I agree that the company has lacked a clear focus on its innovation strategies, at least it has shown a commitment to developing. Google is still a company that attracts some of the best and most inquisitive minds on the planet. The company has already said it has committed more CapEx for 2024, $11 billion.</p><p>I continue to be mystified at these investor reactions to earnings, when Google keeps firing on all cylinders. Nonetheless, as mentioned above, the long-term performance is what matters. Google has outperformed the major indexes over the last 5 years, and my bet is this will continue.</p><h2 id=\"id_3129814431\">Valuation</h2><p>Even after the solid appreciation of the last year, Google has much more to return to investors. As I already wrote about a while ago, this is the best value out of the Magnificent 7. But even using a simple cash flow analysis and analyst estimates, Google should be trading above $200.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2312aff997d9f4aabbf17a65eb151275\" alt=\"DCF model (Alphaspread)\" title=\"DCF model (Alphaspread)\" tg-width=\"1280\" tg-height=\"558\"/><span>DCF model (Alphaspread)</span></p><p>The table above reflects analyst revenue estimates over the next five years. I have then applied a discount rate of 7.7%, and a terminal growth rate of 3%. The next margin is expected to improve to around 27%, which is indicative of the higher expectations for EPS growth.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/40e4a0e1f44230c395d8b29be7b97548\" alt=\"DCF Value (Alphaspread)\" title=\"DCF Value (Alphaspread)\" tg-width=\"1280\" tg-height=\"297\"/><span>DCF Value (Alphaspread)</span></p><p>This comes out to an undervaluation of 25%, with a price target of just over $200.</p><h2 id=\"id_3071339645\">Risks</h2><p>Google is under threat from many sides, sure, but that just comes with having a wide array of revenues. AI is as much a threat as an opportunity, and I just can’t see how I can price in this threat, when the current evidence doesn’t suggest it.</p><p>Yes, there was a slowdown in ad growth, but this was just one quarter. Overall, I am more concerned with how AI and competition could impact margins and also about how continued regulatory pressures could affect future cash flows.</p><h2 id=\"id_2430998330\">Takeaway</h2><p>Google continues to fire on all cylinders. The latest earnings report has shown encouraging growth in the cloud, and the earnings call reflects a good commitment from management to focus on improving Google’s core offerings. Perhaps, 10 years down the line, things will be different, but I just don’t see any evidence of that right now.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Google Q4: A PayPal Moment</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGoogle Q4: A PayPal Moment\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-02-01 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4666356-google-q4-a-paypal-moment><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Alphabet/Google's Q4 earnings disappointed investors with lower-than-expected ad revenues, causing the stock to drop over 7%.Despite concerns about Google's lack of innovation and clear vision, the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4666356-google-q4-a-paypal-moment\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GOOGL":"谷歌A","LU0528227936.USD":"富达环球人口趋势基金A-ACC","BK4551":"寇图资本持仓","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0082616367.USD":"摩根大通美国科技A（dist）","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","LU0080751232.USD":"富达环球多元动力基金A","BK4548":"巴美列捷福持仓","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU0061474960.USD":"天利环球焦点基金AU Acc","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","BK4106":"数据处理与外包服务","LU0965509010.AUD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (AUDHDG) INC","BK4550":"红杉资本持仓","LU1861217088.USD":"贝莱德金融科技A2","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","BK4554":"元宇宙及AR概念","BK4553":"喜马拉雅资本持仓","LU1861220207.SGD":"Blackrock FinTech A2 SGD-H","GOOG":"谷歌","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0965509101.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"A\" (SGDHDG) ACC","LU1814569148.SGD":"WELLINGTON GLOBAL QUALITY GROWTH \"D\" (SGDHDG) ACC","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","BK4566":"资本集团","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","LU0861579265.USD":"联博低波幅策略股票基金A","LU0965509283.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (SGDHDG) INC","LU2089283258.USD":"安联环球可持续基金Cl AM Dis","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","LU0211327993.USD":"TEMPLETON GLOBAL EQUITY INCOME \"A\" (USD) ACC","LU0354030511.USD":"ALLSPRING  U.S. LARGE CAP GROWTH \"I\" (USD) ACC","LU0354030438.USD":"富国美国大盘成长基金Cl A Acc","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD"},"source_url":"https://seekingalpha.com/article/4666356-google-q4-a-paypal-moment","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2408341565","content_text":"Alphabet/Google's Q4 earnings disappointed investors with lower-than-expected ad revenues, causing the stock to drop over 7%.Despite concerns about Google's lack of innovation and clear vision, the company still dominates the search market and leverages AI in its products.Google's solid performance, commitment to development, and undervaluation make it a strong investment with long-term potential.Wirestock/iStock Editorial via Getty ImagesThesis SummaryAlphabet Inc. (NASDAQ:GOOGL) has just reported its Q4 earnings, and the stock is down over 7% after disappointing investors with lower-than-expected ad revenues, even though the company beat on both EPS and overall revenue.It would seem that many investors have written off Google, since the artificial intelligence (\"AI\") mania has taken place. Sure, this presents many challenges but also opportunities.I see some interesting similarities between Google and PayPal Holdings (PYPL), which I recently covered here. PayPal, too, is a large and established company with reasonable growth, good profitability and a fair valuation.But like PayPal, investors fear that the company is failing to innovate and that this could lead to its displacement from its core market.Of course, I strongly disagree with this thesis. GOOGL still holds a firm grip on the market. However, a new sense of direction, or perhaps even just an actual sense of direction, would certainly serve to renew investor confidence.Overall, I remain of the opinion that GOOGL is still the best of the magnificent seven.The PayPal DilemmaIn my last article on Alphabet, I discussed the Q3 earnings. Back then, investors also found a reason to sell Google, even though guidance was beat. In Q3, it was the lack of cloud growth, and now it seems to be the slowdown in ad growth.However, it’s worth mentioning that the stock has outperformed the market since that last report, up over 12%.The latest earnings and earnings call give us some more clear insights into what’s going on at GOOGL and what the plans are for the future. I remain of the opinion that the coming years will present many opportunities for GOOGL. But will the company be able to capture them?Ten years ago, PayPal was at the heart of the fintech revolution. It was one of the most innovative companies in the space, but despite steady growth and profitability, the stock and company have not performed as one might have expected.Indeed, PayPal became entrenched in its ways, and the competition in the space became fierce. GOOGL now runs a similar risk. The company may have become too big for its own good, lacks a clear vision and is under threat from new competitors.There are certainly some similarities but also some stark differences, but before we get into this, let’s look at the latest earnings.Latest EarningsGoogle beat on revenue and EPS, but the stock is still down over 5%. Let's look at the breakdown in revenues and operating income to get a better idea of what’s happening.Google Income Statement (Earnings Release)As we can see, Search revenues grew by a little under 12% YoY. YouTube ads continued to show strong growth—however, Google Advertising revenues overall came in slightly below what analysts were expecting, $65.5 billion versus $65.8 billion.Quite surprising was the sudden uptick in Cloud revenues, which, as mentioned above, became a point of concern in the last quarter but, on this occasion, increased over 25% YoY.Finally, as we can see, GOOGL did even better at increasing its overall income relative to revenues. However, overall income from operations was reduced by the higher than usual costs associated with “Alphabet-level activities'':Alphabet-level activities included charges related to the reduction in force and our office space optimization efforts totaling $1.2 billion and $62 million in accelerated rent and accelerated depreciation.Source: Earnings Release.Overall, this is still a pretty solid performance for the company, in which I would highlight the increase in profitability over the year:Revenues, OI and EPS (10K)While overall revenues rose 9%, operating income increased 13%, and we saw diluted EPS increase by 27% compared to 2022.Insights From The Earnings CallA lot of the issues raised by investors were discussed in the earnings call.Firstly, over the “concerns” that Google Search may be affected by AI.Thanks, Justin. First of all, look, we think about effects on Search, obviously, more broadly. People have a lot of information choices. So -- and user expectations are constantly evolving. And so we've been doing this for a long time. And I think what ends up mattering is a strong, continuous track record of innovation.Obviously, generative AI is a new tool in the arsenal. But there's a lot more that goes into Search: the breadth, the depth the diversity across verticals, stability to follow through getting actually access to rich, diverse sources of content on the web and putting it all together in a compelling way.Source: Earnings Call.As Sundar Pichai explains here, AI is only one of many factors that can improve and influence search. No doubt, it is a factor that GOOGL will have to strive to introduce, and keep innovating in, but Google’s search, still holds an advantage, so to speak, due to its breadth and depth.We also got some insight into the re-acceleration of cloud:Thanks, Mark. On Cloud, let me take that. First of all, a combination of factors. I think definitely excitement around the AI solutions on top of our foundational pillar with data and analytics, infrastructure, security, et cetera. But AI is definitely something which is driving interest and early adoption. And as you saw, that greater than 70% of Gen AI unions are using Google Cloud. And so I think it's an area where our strengths will continue to play out as we go through '24, especially when I look at innovation ahead from us on the AI front. And second, I think there are regional variations, but the cost optimizations in many parts are something we have mostly worked through. And I think that was a contributing factor as well.Source: Earnings Call.It looks like AI has been directly responsible for helping boost Cloud demand. The implementation of AI tools into Cloud has greatly increased the value offering.Lastly, here is some good news with other bets:With regard to Other Bets, we've been working to sharpen our investment focus while capturing the upside given compelling technology breakthroughs across the portfolio. For example, last week, Alphabet's X announced that it would be moving to spin out more projects as independent companies through external capital, giving X the opportunity to bring more focus to the breakthrough technologies it is working on to address some of the world's most pressing challenges.Source: Earnings Call.I like this idea of spinning out more projects into separate companies. Google certainly has enough on its plate with its core offerings. This shows discipline and a commitment to focus on what got the company this far.Future OutlookBased on all of this, I continue to be very bullish on the company, and I do not agree at all with those who characterize Google as being a “dinosaur” or those who believe the company is being displaced.Yes, there are challenges but also many opportunities, and I don’t think it’s fair to compare Google to a company like PayPal, for example.Firstly, Google still absolutely dominates the search market, with over 83% search volume as of the latest 2023 data. That’s still remarkable and much more than what PayPal ever had in the payment market.Secondly, the situation with AI is very different here. As it has been made clear, AI is something the company is also leveraging and is already having an impact on Google Cloud and also in the development of Gemini and Search Generative Experience or SGE. Google’s products cannot be undercut, like transaction fees.And lastly, even though I agree that the company has lacked a clear focus on its innovation strategies, at least it has shown a commitment to developing. Google is still a company that attracts some of the best and most inquisitive minds on the planet. The company has already said it has committed more CapEx for 2024, $11 billion.I continue to be mystified at these investor reactions to earnings, when Google keeps firing on all cylinders. Nonetheless, as mentioned above, the long-term performance is what matters. Google has outperformed the major indexes over the last 5 years, and my bet is this will continue.ValuationEven after the solid appreciation of the last year, Google has much more to return to investors. As I already wrote about a while ago, this is the best value out of the Magnificent 7. But even using a simple cash flow analysis and analyst estimates, Google should be trading above $200.DCF model (Alphaspread)The table above reflects analyst revenue estimates over the next five years. I have then applied a discount rate of 7.7%, and a terminal growth rate of 3%. The next margin is expected to improve to around 27%, which is indicative of the higher expectations for EPS growth.DCF Value (Alphaspread)This comes out to an undervaluation of 25%, with a price target of just over $200.RisksGoogle is under threat from many sides, sure, but that just comes with having a wide array of revenues. AI is as much a threat as an opportunity, and I just can’t see how I can price in this threat, when the current evidence doesn’t suggest it.Yes, there was a slowdown in ad growth, but this was just one quarter. Overall, I am more concerned with how AI and competition could impact margins and also about how continued regulatory pressures could affect future cash flows.TakeawayGoogle continues to fire on all cylinders. The latest earnings report has shown encouraging growth in the cloud, and the earnings call reflects a good commitment from management to focus on improving Google’s core offerings. Perhaps, 10 years down the line, things will be different, but I just don’t see any evidence of that right now.","news_type":1},"isVote":1,"tweetType":1,"viewCount":26,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":207705860923528,"gmtCreate":1691738100316,"gmtModify":1691738226744,"author":{"id":"3573600501193618","authorId":"3573600501193618","name":"Tennis8321","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573600501193618","authorIdStr":"3573600501193618"},"themes":[],"htmlText":"Great ariticle, would you like to share it?","listText":"Great ariticle, would you like to share it?","text":"Great ariticle, would you like to share it?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/207705860923528","repostId":"2358086337","repostType":2,"repost":{"id":"2358086337","weMediaInfo":{"introduction":"Dow Jones publishes the world’s most trusted business news and financial information in a variety of media.","home_visible":0,"media_name":"Dow Jones","id":"106","head_image":"https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99"},"pubTimestamp":1691724434,"share":"https://ttm.financial/m/news/2358086337?lang=&edition=fundamental","pubTime":"2023-08-11 11:27","market":"us","language":"en","title":"AI Mania Triggers Dot-Com Bubble Flashbacks","url":"https://stock-news.laohu8.com/highlight/detail?id=2358086337","media":"Dow Jones","summary":"The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year.Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&P 500 has gained 16%.\"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\". Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over t","content":"<font class=\"NormalMinus1\" face=\"Arial\">\n<p>\n  By Eric Wallerstein \n</p>\n<p>\n  The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year. \n</p>\n<p>\n     Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&amp;P 500 has gained 16%. \n</p>\n<p>\n     For some investors, the surge in Nvidia -- now the fifth-largest U.S. company by market value -- is difficult to chalk up to anything but speculative mania. Its weighting in the benchmark stock indexes means everyday investors are at the whims of its trajectory, whether they believe in AI's potential or not. \n</p>\n<p>\n     \"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\" \n</p>\n<p>\n     Nvidia is the primary producer of semiconductors backing artificial-intelligence systems. The company forecast a record $11 billion in sales for the recently ended quarter when it reported results in May, catching analysts off guard with the projected surge in customer demand. \n</p>\n<p>\n     \"That's when the excitement around AI really ramped up,\" said Ryan McCormack, an Invesco senior exchange-traded fund strategist. \n</p>\n<p>\n     The hype has driven companies such as <a href=\"https://laohu8.com/S/META\">Meta Platforms</a> and Amazon.com that have been building out AI capabilities, he said. Shares of the tech giants are up 154% and 65% in 2023, respectively. Microsoft, which has climbed 35%, has poured billions of dollars into OpenAI's ChatGPT, a chatbot that can answer difficult questions in seconds. \n</p>\n<p>\n     The furious rally in those stocks, long the market's biggest drivers, has fanned worries about market concentration. The 10 biggest stocks in the S&amp;P 500 now comprise more than a third of the market, according to Dow Jones Market Data. They represented 27% of the index at the start of the year and less than a quarter in 2000. \n</p>\n<p>\n     \"The market story that rhymes most with the internet bubble is the concentration of leadership,\" said Mike Edwards, deputy chief investment officer of Weiss Multi-Strategy Advisers. \n</p>\n<p>\n     Nvidia's second-quarter earnings report, due Aug. 23, will provide insight into whether its inexorable rise is well-rooted in demand for chips, or a product of hype. The stock gained 24% in the trading session after its earnings reported in May, and 14% the day following February's results. \n</p>\n<p>\n     Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&amp;P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over the last decade of 10 times, according to Dow Jones Market Data. \n</p>\n<p>\n     The nascency of AI programs such as ChatGPT means it is likely too early to determine whether Nvidia can raise revenue in line with the eye-watering valuation investors have slapped on its shares. If the company's growth isn't enough to reflect its price, the stock could crater. \n</p>\n<p>\n     A basket of 43 high-multiple internet stocks -- those worth at least $5 billion that traded at 25 times their revenue at the turn of the century -- crashed 80% over the next two years, according to Sparkline. \n</p>\n<p>\n     The companies weren't duds, either. Their sales grew 10-fold in the ensuing two decades. But investors were badly bruised from the bust: The shares returned an average of 16% in that time span. The S&amp;P 500 returned 284%. \n</p>\n<p>\n     The basket included Amazon and Microsoft, both darlings of today's market, along with Cisco Systems, then one of the largest companies in the Nasdaq-100. The networking- equipment maker traded as high as 38 times its sales in early 2000. Cisco has returned 43% since the start of the century -- it is down 0.4% when excluding dividends. \n</p>\n<p>\n     \"Valuations matter,\" said Wu. \"Investing in stocks exposed to rapidly growing technologies only works if the growth is not already priced in. Unfortunately, in periods of euphoria, the market has a tendency not only to price in potential growth, but to greatly overextrapolate it.\" \n</p>\n<p>\n     One reason why this rally might lack the boom-and-bust nature of the dot-com bubble: The beneficiaries of artificial intelligence were the stocks already shining this year. Investors were flocking to big tech in the first quarter, seeking shelter in strong balance sheets and cash flows. \n</p>\n<p>\n     Tech companies are also benefiting from the expected end of the Federal Reserve's interest-rate campaign and resilient consumer spending. Cyclical sectors of the broader market have begun to catch up now that recession fears are fading. \n</p>\n<p>\n     \"It's not like 1999 when investors were racing to hot IPOs for companies that had no chance of making money,\" said Edwards. \"Today's winners are disciplined, enormous companies that have moats in place and data sets to exploit.\" \n</p>\n<p>\n     Write to Eric Wallerstein at eric.wallerstein@wsj.com \n</p>\n<pre>\n \n</pre>\n<p>\n  (END) Dow Jones Newswires\n</p>\n<p>\n  August 11, 2023 00:00 ET (04:00 GMT)\n</p>\n<p>\n  Copyright (c) 2023 Dow Jones &amp; Company, Inc.\n</p>\n</font>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>AI Mania Triggers Dot-Com Bubble Flashbacks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAI Mania Triggers Dot-Com Bubble Flashbacks\n</h2>\n\n<h4 class=\"meta\">\n\n\n<div class=\"head\" \">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Dow Jones </p>\n<p class=\"h-time\">2023-08-11 11:27</p>\n</div>\n\n</div>\n\n\n</h4>\n\n</header>\n<article>\n<font class=\"NormalMinus1\" face=\"Arial\">\n<p>\n  By Eric Wallerstein \n</p>\n<p>\n  The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year. \n</p>\n<p>\n     Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&amp;P 500 has gained 16%. \n</p>\n<p>\n     For some investors, the surge in Nvidia -- now the fifth-largest U.S. company by market value -- is difficult to chalk up to anything but speculative mania. Its weighting in the benchmark stock indexes means everyday investors are at the whims of its trajectory, whether they believe in AI's potential or not. \n</p>\n<p>\n     \"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\" \n</p>\n<p>\n     Nvidia is the primary producer of semiconductors backing artificial-intelligence systems. The company forecast a record $11 billion in sales for the recently ended quarter when it reported results in May, catching analysts off guard with the projected surge in customer demand. \n</p>\n<p>\n     \"That's when the excitement around AI really ramped up,\" said Ryan McCormack, an Invesco senior exchange-traded fund strategist. \n</p>\n<p>\n     The hype has driven companies such as <a href=\"https://laohu8.com/S/META\">Meta Platforms</a> and Amazon.com that have been building out AI capabilities, he said. Shares of the tech giants are up 154% and 65% in 2023, respectively. Microsoft, which has climbed 35%, has poured billions of dollars into OpenAI's ChatGPT, a chatbot that can answer difficult questions in seconds. \n</p>\n<p>\n     The furious rally in those stocks, long the market's biggest drivers, has fanned worries about market concentration. The 10 biggest stocks in the S&amp;P 500 now comprise more than a third of the market, according to Dow Jones Market Data. They represented 27% of the index at the start of the year and less than a quarter in 2000. \n</p>\n<p>\n     \"The market story that rhymes most with the internet bubble is the concentration of leadership,\" said Mike Edwards, deputy chief investment officer of Weiss Multi-Strategy Advisers. \n</p>\n<p>\n     Nvidia's second-quarter earnings report, due Aug. 23, will provide insight into whether its inexorable rise is well-rooted in demand for chips, or a product of hype. The stock gained 24% in the trading session after its earnings reported in May, and 14% the day following February's results. \n</p>\n<p>\n     Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&amp;P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over the last decade of 10 times, according to Dow Jones Market Data. \n</p>\n<p>\n     The nascency of AI programs such as ChatGPT means it is likely too early to determine whether Nvidia can raise revenue in line with the eye-watering valuation investors have slapped on its shares. If the company's growth isn't enough to reflect its price, the stock could crater. \n</p>\n<p>\n     A basket of 43 high-multiple internet stocks -- those worth at least $5 billion that traded at 25 times their revenue at the turn of the century -- crashed 80% over the next two years, according to Sparkline. \n</p>\n<p>\n     The companies weren't duds, either. Their sales grew 10-fold in the ensuing two decades. But investors were badly bruised from the bust: The shares returned an average of 16% in that time span. The S&amp;P 500 returned 284%. \n</p>\n<p>\n     The basket included Amazon and Microsoft, both darlings of today's market, along with Cisco Systems, then one of the largest companies in the Nasdaq-100. The networking- equipment maker traded as high as 38 times its sales in early 2000. Cisco has returned 43% since the start of the century -- it is down 0.4% when excluding dividends. \n</p>\n<p>\n     \"Valuations matter,\" said Wu. \"Investing in stocks exposed to rapidly growing technologies only works if the growth is not already priced in. Unfortunately, in periods of euphoria, the market has a tendency not only to price in potential growth, but to greatly overextrapolate it.\" \n</p>\n<p>\n     One reason why this rally might lack the boom-and-bust nature of the dot-com bubble: The beneficiaries of artificial intelligence were the stocks already shining this year. Investors were flocking to big tech in the first quarter, seeking shelter in strong balance sheets and cash flows. \n</p>\n<p>\n     Tech companies are also benefiting from the expected end of the Federal Reserve's interest-rate campaign and resilient consumer spending. Cyclical sectors of the broader market have begun to catch up now that recession fears are fading. \n</p>\n<p>\n     \"It's not like 1999 when investors were racing to hot IPOs for companies that had no chance of making money,\" said Edwards. \"Today's winners are disciplined, enormous companies that have moats in place and data sets to exploit.\" \n</p>\n<p>\n     Write to Eric Wallerstein at eric.wallerstein@wsj.com \n</p>\n<pre>\n \n</pre>\n<p>\n  (END) Dow Jones Newswires\n</p>\n<p>\n  August 11, 2023 00:00 ET (04:00 GMT)\n</p>\n<p>\n  Copyright (c) 2023 Dow Jones &amp; Company, Inc.\n</p>\n</font>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0175139822.USD":"AB FCP I Global Equity Blend A USD","BK4559":"巴菲特持仓","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU1430594728.SGD":"Eastspring Investments - Global Low Volatility Equity AS SGD","LU1066053197.SGD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM3\" (SGDHDG) INC","BK4020":"通信设备","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","NVDA":"英伟达","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","BK4550":"红杉资本持仓","MSFT":"微软","BK4141":"半导体产品","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","UPRO":"三倍做多标普500ETF","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","BK4551":"寇图资本持仓","LU0149725797.USD":"汇丰美国股市经济规模基金","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","SH":"标普500反向ETF","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","BK4560":"网络安全概念","BK4549":"软银资本持仓","CSCO":"思科","IVV":"标普500指数ETF","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","SSO":"两倍做多标普500ETF","BK4548":"巴美列捷福持仓","BK4529":"IDC概念","LU0234570918.USD":"高盛全球核心股票组合Acc Close","OEF":"标普100指数ETF-iShares","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","SPXU":"三倍做空标普500ETF","LU1267930730.SGD":"富兰克林美国机遇基金AS Acc SGD (CPF)","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","BK4528":"SaaS概念","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","BK4554":"元宇宙及AR概念","SDS":"两倍做空标普500ETF","LU0056508442.USD":"贝莱德世界科技基金A2","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","SPY":"标普500ETF","BK4567":"ESG概念","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC",".SPX":"S&P 500 Index","OEX":"标普100","BK4566":"资本集团"},"source_url":"https://dowjonesnews.com/newdjn/logon.aspx?AL=N","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2358086337","content_text":"By Eric Wallerstein \n\n\n  The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year. \n\n\n     Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&P 500 has gained 16%. \n\n\n     For some investors, the surge in Nvidia -- now the fifth-largest U.S. company by market value -- is difficult to chalk up to anything but speculative mania. Its weighting in the benchmark stock indexes means everyday investors are at the whims of its trajectory, whether they believe in AI's potential or not. \n\n\n     \"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\" \n\n\n     Nvidia is the primary producer of semiconductors backing artificial-intelligence systems. The company forecast a record $11 billion in sales for the recently ended quarter when it reported results in May, catching analysts off guard with the projected surge in customer demand. \n\n\n     \"That's when the excitement around AI really ramped up,\" said Ryan McCormack, an Invesco senior exchange-traded fund strategist. \n\n\n     The hype has driven companies such as Meta Platforms and Amazon.com that have been building out AI capabilities, he said. Shares of the tech giants are up 154% and 65% in 2023, respectively. Microsoft, which has climbed 35%, has poured billions of dollars into OpenAI's ChatGPT, a chatbot that can answer difficult questions in seconds. \n\n\n     The furious rally in those stocks, long the market's biggest drivers, has fanned worries about market concentration. The 10 biggest stocks in the S&P 500 now comprise more than a third of the market, according to Dow Jones Market Data. They represented 27% of the index at the start of the year and less than a quarter in 2000. \n\n\n     \"The market story that rhymes most with the internet bubble is the concentration of leadership,\" said Mike Edwards, deputy chief investment officer of Weiss Multi-Strategy Advisers. \n\n\n     Nvidia's second-quarter earnings report, due Aug. 23, will provide insight into whether its inexorable rise is well-rooted in demand for chips, or a product of hype. The stock gained 24% in the trading session after its earnings reported in May, and 14% the day following February's results. \n\n\n     Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over the last decade of 10 times, according to Dow Jones Market Data. \n\n\n     The nascency of AI programs such as ChatGPT means it is likely too early to determine whether Nvidia can raise revenue in line with the eye-watering valuation investors have slapped on its shares. If the company's growth isn't enough to reflect its price, the stock could crater. \n\n\n     A basket of 43 high-multiple internet stocks -- those worth at least $5 billion that traded at 25 times their revenue at the turn of the century -- crashed 80% over the next two years, according to Sparkline. \n\n\n     The companies weren't duds, either. Their sales grew 10-fold in the ensuing two decades. But investors were badly bruised from the bust: The shares returned an average of 16% in that time span. The S&P 500 returned 284%. \n\n\n     The basket included Amazon and Microsoft, both darlings of today's market, along with Cisco Systems, then one of the largest companies in the Nasdaq-100. The networking- equipment maker traded as high as 38 times its sales in early 2000. Cisco has returned 43% since the start of the century -- it is down 0.4% when excluding dividends. \n\n\n     \"Valuations matter,\" said Wu. \"Investing in stocks exposed to rapidly growing technologies only works if the growth is not already priced in. Unfortunately, in periods of euphoria, the market has a tendency not only to price in potential growth, but to greatly overextrapolate it.\" \n\n\n     One reason why this rally might lack the boom-and-bust nature of the dot-com bubble: The beneficiaries of artificial intelligence were the stocks already shining this year. Investors were flocking to big tech in the first quarter, seeking shelter in strong balance sheets and cash flows. \n\n\n     Tech companies are also benefiting from the expected end of the Federal Reserve's interest-rate campaign and resilient consumer spending. Cyclical sectors of the broader market have begun to catch up now that recession fears are fading. \n\n\n     \"It's not like 1999 when investors were racing to hot IPOs for companies that had no chance of making money,\" said Edwards. \"Today's winners are disciplined, enormous companies that have moats in place and data sets to exploit.\" \n\n\n     Write to Eric Wallerstein at eric.wallerstein@wsj.com \n\n\n \n\n\n  (END) Dow Jones Newswires\n\n\n  August 11, 2023 00:00 ET (04:00 GMT)\n\n\n  Copyright (c) 2023 Dow Jones & Company, Inc.","news_type":1},"isVote":1,"tweetType":1,"viewCount":170,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":269428332470272,"gmtCreate":1706795226354,"gmtModify":1706799294345,"author":{"id":"3573600501193618","authorId":"3573600501193618","name":"Tennis8321","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573600501193618","authorIdStr":"3573600501193618"},"themes":[],"htmlText":"Hiyzz<a href=\"https://ttm.financial/U/3574939406817507\">@Pokpok </a> not yt","listText":"Hiyzz<a href=\"https://ttm.financial/U/3574939406817507\">@Pokpok </a> not yt","text":"Hiyzz@Pokpok not yt","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/269428332470272","repostId":"2408341565","repostType":2,"repost":{"id":"2408341565","pubTimestamp":1706788800,"share":"https://ttm.financial/m/news/2408341565?lang=&edition=fundamental","pubTime":"2024-02-01 20:00","market":"us","language":"en","title":"Google Q4: A PayPal Moment","url":"https://stock-news.laohu8.com/highlight/detail?id=2408341565","media":"Seeking Alpha","summary":"Ten years ago, PayPal was at the heart of the fintech revolution. It was one of the most innovative companies in the space, but despite steady growth and profitability, the stock and company have not performed as one might have expected.Indeed, PayPal became entrenched in its ways, and the competition in the space became fierce. GOOGL now runs a similar risk. The company may have become too big for its own good, lacks a clear vision and is under threat from new competitors.There are certainly so","content":"<html><head></head><body><ul style=\"\"><li><p>Alphabet/Google&#39;s Q4 earnings disappointed investors with lower-than-expected ad revenues, causing the stock to drop over 7%.</p></li><li><p>Despite concerns about Google&#39;s lack of innovation and clear vision, the company still dominates the search market and leverages AI in its products.</p></li><li><p>Google&#39;s solid performance, commitment to development, and undervaluation make it a strong investment with long-term potential.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d2ea3525551a78da30e115d08dcb4ae5\" alt=\"Wirestock/iStock Editorial via Getty Images\" title=\"Wirestock/iStock Editorial via Getty Images\" tg-width=\"750\" tg-height=\"500\"/><span>Wirestock/iStock Editorial via Getty Images</span></p><h2 id=\"id_905242568\">Thesis Summary</h2><p><strong>Alphabet Inc.</strong> (NASDAQ:GOOGL) has just reported its Q4 earnings, and the stock is down over 7% after disappointing investors with lower-than-expected ad revenues, even though the company beat on both EPS and overall revenue.</p><p>It would seem that many investors have written off Google, since the artificial intelligence (&#34;AI&#34;) mania has taken place. Sure, this presents many challenges but also opportunities.</p><p>I see some interesting similarities between Google and <a href=\"https://laohu8.com/S/PYPL\">PayPal</a> Holdings (PYPL), which I recently covered here. PayPal, too, is a large and established company with reasonable growth, good profitability and a fair valuation.</p><p>But like PayPal, investors fear that the company is failing to innovate and that this could lead to its displacement from its core market.</p><p>Of course, I strongly disagree with this thesis. GOOGL still holds a firm grip on the market. However, a new sense of direction, or perhaps even just an actual sense of direction, would certainly serve to renew investor confidence.</p><p>Overall, I remain of the opinion that GOOGL is still the best of the magnificent seven.</p><h2 id=\"id_2400518\">The PayPal Dilemma</h2><p>In my last article on Alphabet, I discussed the Q3 earnings. Back then, investors also found a reason to sell Google, even though guidance was beat. In Q3, it was the lack of cloud growth, and now it seems to be the slowdown in ad growth.</p><p>However, it’s worth mentioning that the stock has outperformed the market since that last report, up over 12%.</p><p>The latest earnings and earnings call give us some more clear insights into what’s going on at GOOGL and what the plans are for the future. I remain of the opinion that the coming years will present many opportunities for GOOGL. But will the company be able to capture them?</p><p>Ten years ago, PayPal was at the heart of the fintech revolution. It was one of the most innovative companies in the space, but despite steady growth and profitability, the stock and company have not performed as one might have expected.</p><p>Indeed, PayPal became entrenched in its ways, and the competition in the space became fierce. GOOGL now runs a similar risk. The company may have become too big for its own good, lacks a clear vision and is under threat from new competitors.</p><p>There are certainly some similarities but also some stark differences, but before we get into this, let’s look at the latest earnings.</p><h2 id=\"id_2986157319\">Latest Earnings</h2><p>Google beat on revenue and EPS, but the stock is still down over 5%. Let&#39;s look at the breakdown in revenues and operating income to get a better idea of what’s happening.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/351c16701cea5b035c160b9bad528814\" alt=\"Google Income Statement (Earnings Release)\" title=\"Google Income Statement (Earnings Release)\" tg-width=\"1280\" tg-height=\"954\"/><span>Google Income Statement (Earnings Release)</span></p><p>As we can see, Search revenues grew by a little under 12% YoY. YouTube ads continued to show strong growth—however, Google Advertising revenues overall came in slightly below what analysts were expecting, $65.5 billion versus $65.8 billion.</p><p>Quite surprising was the sudden uptick in Cloud revenues, which, as mentioned above, became a point of concern in the last quarter but, on this occasion, increased over 25% YoY.</p><p>Finally, as we can see, GOOGL did even better at increasing its overall income relative to revenues. However, overall income from operations was reduced by the higher than usual costs associated with “Alphabet-level activities&#39;&#39;:</p><blockquote><p>Alphabet-level activities included charges related to the reduction in force and our office space optimization efforts totaling $1.2 billion and $62 million in accelerated rent and accelerated depreciation.</p></blockquote><p>Source: Earnings Release.</p><p>Overall, this is still a pretty solid performance for the company, in which I would highlight the increase in profitability over the year:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/51514d7e8f9b1823b65dd1c948f98b43\" alt=\"Revenues, OI and EPS (10K)\" title=\"Revenues, OI and EPS (10K)\" tg-width=\"1260\" tg-height=\"794\"/><span>Revenues, OI and EPS (10K)</span></p><p>While overall revenues rose 9%, operating income increased 13%, and we saw diluted EPS increase by 27% compared to 2022.</p><h2 id=\"id_1484054483\">Insights From The Earnings Call</h2><p>A lot of the issues raised by investors were discussed in the earnings call.</p><p>Firstly, over the “concerns” that Google Search may be affected by AI.</p><blockquote><p>Thanks, Justin. First of all, look, we think about effects on Search, obviously, more broadly. People have a lot of information choices. So -- and user expectations are constantly evolving. And so we&#39;ve been doing this for a long time. And I think what ends up mattering is a strong, continuous track record of innovation.</p><p>Obviously, generative AI is a new tool in the arsenal. But there&#39;s a lot more that goes into Search: the breadth, the depth the diversity across verticals, stability to follow through getting actually access to rich, diverse sources of content on the web and putting it all together in a compelling way.</p></blockquote><p>Source: Earnings Call.</p><p>As Sundar Pichai explains here, AI is only one of many factors that can improve and influence search. No doubt, it is a factor that GOOGL will have to strive to introduce, and keep innovating in, but Google’s search, still holds an advantage, so to speak, due to its breadth and depth.</p><p>We also got some insight into the re-acceleration of cloud:</p><blockquote><p>Thanks, Mark. On Cloud, let me take that. First of all, a combination of factors. I think definitely excitement around the AI solutions on top of our foundational pillar with data and analytics, infrastructure, security, et cetera. But AI is definitely something which is driving interest and early adoption. And as you saw, that greater than 70% of Gen AI unions are using Google Cloud. And so I think it&#39;s an area where our strengths will continue to play out as we go through &#39;24, especially when I look at innovation ahead from us on the AI front. And second, I think there are regional variations, but the cost optimizations in many parts are something we have mostly worked through. And I think that was a contributing factor as well.</p></blockquote><p>Source: Earnings Call.</p><p>It looks like AI has been directly responsible for helping boost Cloud demand. The implementation of AI tools into Cloud has greatly increased the value offering.</p><p>Lastly, here is some good news with other bets:</p><blockquote><p>With regard to Other Bets, we&#39;ve been working to sharpen our investment focus while capturing the upside given compelling technology breakthroughs across the portfolio. For example, last week, Alphabet&#39;s X announced that it would be moving to spin out more projects as independent companies through external capital, giving X the opportunity to bring more focus to the breakthrough technologies it is working on to address some of the world&#39;s most pressing challenges.</p></blockquote><p>Source: Earnings Call.</p><p>I like this idea of spinning out more projects into separate companies. Google certainly has enough on its plate with its core offerings. This shows discipline and a commitment to focus on what got the company this far.</p><h2 id=\"id_853159350\">Future Outlook</h2><p>Based on all of this, I continue to be very bullish on the company, and I do not agree at all with those who characterize Google as being a “dinosaur” or those who believe the company is being displaced.</p><p>Yes, there are challenges but also many opportunities, and I don’t think it’s fair to compare Google to a company like PayPal, for example.</p><p>Firstly, Google still absolutely dominates the search market, with over 83% search volume as of the latest 2023 data. That’s still remarkable and much more than what PayPal ever had in the payment market.</p><p>Secondly, the situation with AI is very different here. As it has been made clear, AI is something the company is also leveraging and is already having an impact on Google Cloud and also in the development of Gemini and Search Generative <a href=\"https://laohu8.com/S/EXP.AU\">Experience</a> or SGE. Google’s products cannot be undercut, like transaction fees.</p><p>And lastly, even though I agree that the company has lacked a clear focus on its innovation strategies, at least it has shown a commitment to developing. Google is still a company that attracts some of the best and most inquisitive minds on the planet. The company has already said it has committed more CapEx for 2024, $11 billion.</p><p>I continue to be mystified at these investor reactions to earnings, when Google keeps firing on all cylinders. Nonetheless, as mentioned above, the long-term performance is what matters. Google has outperformed the major indexes over the last 5 years, and my bet is this will continue.</p><h2 id=\"id_3129814431\">Valuation</h2><p>Even after the solid appreciation of the last year, Google has much more to return to investors. As I already wrote about a while ago, this is the best value out of the Magnificent 7. But even using a simple cash flow analysis and analyst estimates, Google should be trading above $200.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2312aff997d9f4aabbf17a65eb151275\" alt=\"DCF model (Alphaspread)\" title=\"DCF model (Alphaspread)\" tg-width=\"1280\" tg-height=\"558\"/><span>DCF model (Alphaspread)</span></p><p>The table above reflects analyst revenue estimates over the next five years. I have then applied a discount rate of 7.7%, and a terminal growth rate of 3%. The next margin is expected to improve to around 27%, which is indicative of the higher expectations for EPS growth.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/40e4a0e1f44230c395d8b29be7b97548\" alt=\"DCF Value (Alphaspread)\" title=\"DCF Value (Alphaspread)\" tg-width=\"1280\" tg-height=\"297\"/><span>DCF Value (Alphaspread)</span></p><p>This comes out to an undervaluation of 25%, with a price target of just over $200.</p><h2 id=\"id_3071339645\">Risks</h2><p>Google is under threat from many sides, sure, but that just comes with having a wide array of revenues. AI is as much a threat as an opportunity, and I just can’t see how I can price in this threat, when the current evidence doesn’t suggest it.</p><p>Yes, there was a slowdown in ad growth, but this was just one quarter. Overall, I am more concerned with how AI and competition could impact margins and also about how continued regulatory pressures could affect future cash flows.</p><h2 id=\"id_2430998330\">Takeaway</h2><p>Google continues to fire on all cylinders. The latest earnings report has shown encouraging growth in the cloud, and the earnings call reflects a good commitment from management to focus on improving Google’s core offerings. Perhaps, 10 years down the line, things will be different, but I just don’t see any evidence of that right now.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Google Q4: A PayPal Moment</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGoogle Q4: A PayPal Moment\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-02-01 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4666356-google-q4-a-paypal-moment><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Alphabet/Google's Q4 earnings disappointed investors with lower-than-expected ad revenues, causing the stock to drop over 7%.Despite concerns about Google's lack of innovation and clear vision, the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4666356-google-q4-a-paypal-moment\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GOOGL":"谷歌A","LU0528227936.USD":"富达环球人口趋势基金A-ACC","BK4551":"寇图资本持仓","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0082616367.USD":"摩根大通美国科技A（dist）","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","LU0080751232.USD":"富达环球多元动力基金A","BK4548":"巴美列捷福持仓","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU0061474960.USD":"天利环球焦点基金AU Acc","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","BK4106":"数据处理与外包服务","LU0965509010.AUD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (AUDHDG) INC","BK4550":"红杉资本持仓","LU1861217088.USD":"贝莱德金融科技A2","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","BK4554":"元宇宙及AR概念","BK4553":"喜马拉雅资本持仓","LU1861220207.SGD":"Blackrock FinTech A2 SGD-H","GOOG":"谷歌","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0965509101.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"A\" (SGDHDG) ACC","LU1814569148.SGD":"WELLINGTON GLOBAL QUALITY GROWTH \"D\" (SGDHDG) ACC","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","BK4566":"资本集团","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","LU0861579265.USD":"联博低波幅策略股票基金A","LU0965509283.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (SGDHDG) INC","LU2089283258.USD":"安联环球可持续基金Cl AM Dis","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","LU0211327993.USD":"TEMPLETON GLOBAL EQUITY INCOME \"A\" (USD) ACC","LU0354030511.USD":"ALLSPRING  U.S. LARGE CAP GROWTH \"I\" (USD) ACC","LU0354030438.USD":"富国美国大盘成长基金Cl A Acc","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD"},"source_url":"https://seekingalpha.com/article/4666356-google-q4-a-paypal-moment","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2408341565","content_text":"Alphabet/Google's Q4 earnings disappointed investors with lower-than-expected ad revenues, causing the stock to drop over 7%.Despite concerns about Google's lack of innovation and clear vision, the company still dominates the search market and leverages AI in its products.Google's solid performance, commitment to development, and undervaluation make it a strong investment with long-term potential.Wirestock/iStock Editorial via Getty ImagesThesis SummaryAlphabet Inc. (NASDAQ:GOOGL) has just reported its Q4 earnings, and the stock is down over 7% after disappointing investors with lower-than-expected ad revenues, even though the company beat on both EPS and overall revenue.It would seem that many investors have written off Google, since the artificial intelligence (\"AI\") mania has taken place. Sure, this presents many challenges but also opportunities.I see some interesting similarities between Google and PayPal Holdings (PYPL), which I recently covered here. PayPal, too, is a large and established company with reasonable growth, good profitability and a fair valuation.But like PayPal, investors fear that the company is failing to innovate and that this could lead to its displacement from its core market.Of course, I strongly disagree with this thesis. GOOGL still holds a firm grip on the market. However, a new sense of direction, or perhaps even just an actual sense of direction, would certainly serve to renew investor confidence.Overall, I remain of the opinion that GOOGL is still the best of the magnificent seven.The PayPal DilemmaIn my last article on Alphabet, I discussed the Q3 earnings. Back then, investors also found a reason to sell Google, even though guidance was beat. In Q3, it was the lack of cloud growth, and now it seems to be the slowdown in ad growth.However, it’s worth mentioning that the stock has outperformed the market since that last report, up over 12%.The latest earnings and earnings call give us some more clear insights into what’s going on at GOOGL and what the plans are for the future. I remain of the opinion that the coming years will present many opportunities for GOOGL. But will the company be able to capture them?Ten years ago, PayPal was at the heart of the fintech revolution. It was one of the most innovative companies in the space, but despite steady growth and profitability, the stock and company have not performed as one might have expected.Indeed, PayPal became entrenched in its ways, and the competition in the space became fierce. GOOGL now runs a similar risk. The company may have become too big for its own good, lacks a clear vision and is under threat from new competitors.There are certainly some similarities but also some stark differences, but before we get into this, let’s look at the latest earnings.Latest EarningsGoogle beat on revenue and EPS, but the stock is still down over 5%. Let's look at the breakdown in revenues and operating income to get a better idea of what’s happening.Google Income Statement (Earnings Release)As we can see, Search revenues grew by a little under 12% YoY. YouTube ads continued to show strong growth—however, Google Advertising revenues overall came in slightly below what analysts were expecting, $65.5 billion versus $65.8 billion.Quite surprising was the sudden uptick in Cloud revenues, which, as mentioned above, became a point of concern in the last quarter but, on this occasion, increased over 25% YoY.Finally, as we can see, GOOGL did even better at increasing its overall income relative to revenues. However, overall income from operations was reduced by the higher than usual costs associated with “Alphabet-level activities'':Alphabet-level activities included charges related to the reduction in force and our office space optimization efforts totaling $1.2 billion and $62 million in accelerated rent and accelerated depreciation.Source: Earnings Release.Overall, this is still a pretty solid performance for the company, in which I would highlight the increase in profitability over the year:Revenues, OI and EPS (10K)While overall revenues rose 9%, operating income increased 13%, and we saw diluted EPS increase by 27% compared to 2022.Insights From The Earnings CallA lot of the issues raised by investors were discussed in the earnings call.Firstly, over the “concerns” that Google Search may be affected by AI.Thanks, Justin. First of all, look, we think about effects on Search, obviously, more broadly. People have a lot of information choices. So -- and user expectations are constantly evolving. And so we've been doing this for a long time. And I think what ends up mattering is a strong, continuous track record of innovation.Obviously, generative AI is a new tool in the arsenal. But there's a lot more that goes into Search: the breadth, the depth the diversity across verticals, stability to follow through getting actually access to rich, diverse sources of content on the web and putting it all together in a compelling way.Source: Earnings Call.As Sundar Pichai explains here, AI is only one of many factors that can improve and influence search. No doubt, it is a factor that GOOGL will have to strive to introduce, and keep innovating in, but Google’s search, still holds an advantage, so to speak, due to its breadth and depth.We also got some insight into the re-acceleration of cloud:Thanks, Mark. On Cloud, let me take that. First of all, a combination of factors. I think definitely excitement around the AI solutions on top of our foundational pillar with data and analytics, infrastructure, security, et cetera. But AI is definitely something which is driving interest and early adoption. And as you saw, that greater than 70% of Gen AI unions are using Google Cloud. And so I think it's an area where our strengths will continue to play out as we go through '24, especially when I look at innovation ahead from us on the AI front. And second, I think there are regional variations, but the cost optimizations in many parts are something we have mostly worked through. And I think that was a contributing factor as well.Source: Earnings Call.It looks like AI has been directly responsible for helping boost Cloud demand. The implementation of AI tools into Cloud has greatly increased the value offering.Lastly, here is some good news with other bets:With regard to Other Bets, we've been working to sharpen our investment focus while capturing the upside given compelling technology breakthroughs across the portfolio. For example, last week, Alphabet's X announced that it would be moving to spin out more projects as independent companies through external capital, giving X the opportunity to bring more focus to the breakthrough technologies it is working on to address some of the world's most pressing challenges.Source: Earnings Call.I like this idea of spinning out more projects into separate companies. Google certainly has enough on its plate with its core offerings. This shows discipline and a commitment to focus on what got the company this far.Future OutlookBased on all of this, I continue to be very bullish on the company, and I do not agree at all with those who characterize Google as being a “dinosaur” or those who believe the company is being displaced.Yes, there are challenges but also many opportunities, and I don’t think it’s fair to compare Google to a company like PayPal, for example.Firstly, Google still absolutely dominates the search market, with over 83% search volume as of the latest 2023 data. That’s still remarkable and much more than what PayPal ever had in the payment market.Secondly, the situation with AI is very different here. As it has been made clear, AI is something the company is also leveraging and is already having an impact on Google Cloud and also in the development of Gemini and Search Generative Experience or SGE. Google’s products cannot be undercut, like transaction fees.And lastly, even though I agree that the company has lacked a clear focus on its innovation strategies, at least it has shown a commitment to developing. Google is still a company that attracts some of the best and most inquisitive minds on the planet. The company has already said it has committed more CapEx for 2024, $11 billion.I continue to be mystified at these investor reactions to earnings, when Google keeps firing on all cylinders. Nonetheless, as mentioned above, the long-term performance is what matters. Google has outperformed the major indexes over the last 5 years, and my bet is this will continue.ValuationEven after the solid appreciation of the last year, Google has much more to return to investors. As I already wrote about a while ago, this is the best value out of the Magnificent 7. But even using a simple cash flow analysis and analyst estimates, Google should be trading above $200.DCF model (Alphaspread)The table above reflects analyst revenue estimates over the next five years. I have then applied a discount rate of 7.7%, and a terminal growth rate of 3%. The next margin is expected to improve to around 27%, which is indicative of the higher expectations for EPS growth.DCF Value (Alphaspread)This comes out to an undervaluation of 25%, with a price target of just over $200.RisksGoogle is under threat from many sides, sure, but that just comes with having a wide array of revenues. AI is as much a threat as an opportunity, and I just can’t see how I can price in this threat, when the current evidence doesn’t suggest it.Yes, there was a slowdown in ad growth, but this was just one quarter. Overall, I am more concerned with how AI and competition could impact margins and also about how continued regulatory pressures could affect future cash flows.TakeawayGoogle continues to fire on all cylinders. The latest earnings report has shown encouraging growth in the cloud, and the earnings call reflects a good commitment from management to focus on improving Google’s core offerings. Perhaps, 10 years down the line, things will be different, but I just don’t see any evidence of that right now.","news_type":1},"isVote":1,"tweetType":1,"viewCount":26,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":207705860923528,"gmtCreate":1691738100316,"gmtModify":1691738226744,"author":{"id":"3573600501193618","authorId":"3573600501193618","name":"Tennis8321","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573600501193618","authorIdStr":"3573600501193618"},"themes":[],"htmlText":"Great ariticle, would you like to share it?","listText":"Great ariticle, would you like to share it?","text":"Great ariticle, would you like to share it?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/207705860923528","repostId":"2358086337","repostType":2,"repost":{"id":"2358086337","weMediaInfo":{"introduction":"Dow Jones publishes the world’s most trusted business news and financial information in a variety of media.","home_visible":0,"media_name":"Dow Jones","id":"106","head_image":"https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99"},"pubTimestamp":1691724434,"share":"https://ttm.financial/m/news/2358086337?lang=&edition=fundamental","pubTime":"2023-08-11 11:27","market":"us","language":"en","title":"AI Mania Triggers Dot-Com Bubble Flashbacks","url":"https://stock-news.laohu8.com/highlight/detail?id=2358086337","media":"Dow Jones","summary":"The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year.Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&P 500 has gained 16%.\"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\". Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over t","content":"<font class=\"NormalMinus1\" face=\"Arial\">\n<p>\n  By Eric Wallerstein \n</p>\n<p>\n  The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year. \n</p>\n<p>\n     Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&amp;P 500 has gained 16%. \n</p>\n<p>\n     For some investors, the surge in Nvidia -- now the fifth-largest U.S. company by market value -- is difficult to chalk up to anything but speculative mania. Its weighting in the benchmark stock indexes means everyday investors are at the whims of its trajectory, whether they believe in AI's potential or not. \n</p>\n<p>\n     \"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\" \n</p>\n<p>\n     Nvidia is the primary producer of semiconductors backing artificial-intelligence systems. The company forecast a record $11 billion in sales for the recently ended quarter when it reported results in May, catching analysts off guard with the projected surge in customer demand. \n</p>\n<p>\n     \"That's when the excitement around AI really ramped up,\" said Ryan McCormack, an Invesco senior exchange-traded fund strategist. \n</p>\n<p>\n     The hype has driven companies such as <a href=\"https://laohu8.com/S/META\">Meta Platforms</a> and Amazon.com that have been building out AI capabilities, he said. Shares of the tech giants are up 154% and 65% in 2023, respectively. Microsoft, which has climbed 35%, has poured billions of dollars into OpenAI's ChatGPT, a chatbot that can answer difficult questions in seconds. \n</p>\n<p>\n     The furious rally in those stocks, long the market's biggest drivers, has fanned worries about market concentration. The 10 biggest stocks in the S&amp;P 500 now comprise more than a third of the market, according to Dow Jones Market Data. They represented 27% of the index at the start of the year and less than a quarter in 2000. \n</p>\n<p>\n     \"The market story that rhymes most with the internet bubble is the concentration of leadership,\" said Mike Edwards, deputy chief investment officer of Weiss Multi-Strategy Advisers. \n</p>\n<p>\n     Nvidia's second-quarter earnings report, due Aug. 23, will provide insight into whether its inexorable rise is well-rooted in demand for chips, or a product of hype. The stock gained 24% in the trading session after its earnings reported in May, and 14% the day following February's results. \n</p>\n<p>\n     Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&amp;P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over the last decade of 10 times, according to Dow Jones Market Data. \n</p>\n<p>\n     The nascency of AI programs such as ChatGPT means it is likely too early to determine whether Nvidia can raise revenue in line with the eye-watering valuation investors have slapped on its shares. If the company's growth isn't enough to reflect its price, the stock could crater. \n</p>\n<p>\n     A basket of 43 high-multiple internet stocks -- those worth at least $5 billion that traded at 25 times their revenue at the turn of the century -- crashed 80% over the next two years, according to Sparkline. \n</p>\n<p>\n     The companies weren't duds, either. Their sales grew 10-fold in the ensuing two decades. But investors were badly bruised from the bust: The shares returned an average of 16% in that time span. The S&amp;P 500 returned 284%. \n</p>\n<p>\n     The basket included Amazon and Microsoft, both darlings of today's market, along with Cisco Systems, then one of the largest companies in the Nasdaq-100. The networking- equipment maker traded as high as 38 times its sales in early 2000. Cisco has returned 43% since the start of the century -- it is down 0.4% when excluding dividends. \n</p>\n<p>\n     \"Valuations matter,\" said Wu. \"Investing in stocks exposed to rapidly growing technologies only works if the growth is not already priced in. Unfortunately, in periods of euphoria, the market has a tendency not only to price in potential growth, but to greatly overextrapolate it.\" \n</p>\n<p>\n     One reason why this rally might lack the boom-and-bust nature of the dot-com bubble: The beneficiaries of artificial intelligence were the stocks already shining this year. Investors were flocking to big tech in the first quarter, seeking shelter in strong balance sheets and cash flows. \n</p>\n<p>\n     Tech companies are also benefiting from the expected end of the Federal Reserve's interest-rate campaign and resilient consumer spending. Cyclical sectors of the broader market have begun to catch up now that recession fears are fading. \n</p>\n<p>\n     \"It's not like 1999 when investors were racing to hot IPOs for companies that had no chance of making money,\" said Edwards. \"Today's winners are disciplined, enormous companies that have moats in place and data sets to exploit.\" \n</p>\n<p>\n     Write to Eric Wallerstein at eric.wallerstein@wsj.com \n</p>\n<pre>\n \n</pre>\n<p>\n  (END) Dow Jones Newswires\n</p>\n<p>\n  August 11, 2023 00:00 ET (04:00 GMT)\n</p>\n<p>\n  Copyright (c) 2023 Dow Jones &amp; Company, Inc.\n</p>\n</font>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>AI Mania Triggers Dot-Com Bubble Flashbacks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAI Mania Triggers Dot-Com Bubble Flashbacks\n</h2>\n\n<h4 class=\"meta\">\n\n\n<div class=\"head\" \">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Dow Jones </p>\n<p class=\"h-time\">2023-08-11 11:27</p>\n</div>\n\n</div>\n\n\n</h4>\n\n</header>\n<article>\n<font class=\"NormalMinus1\" face=\"Arial\">\n<p>\n  By Eric Wallerstein \n</p>\n<p>\n  The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year. \n</p>\n<p>\n     Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&amp;P 500 has gained 16%. \n</p>\n<p>\n     For some investors, the surge in Nvidia -- now the fifth-largest U.S. company by market value -- is difficult to chalk up to anything but speculative mania. Its weighting in the benchmark stock indexes means everyday investors are at the whims of its trajectory, whether they believe in AI's potential or not. \n</p>\n<p>\n     \"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\" \n</p>\n<p>\n     Nvidia is the primary producer of semiconductors backing artificial-intelligence systems. The company forecast a record $11 billion in sales for the recently ended quarter when it reported results in May, catching analysts off guard with the projected surge in customer demand. \n</p>\n<p>\n     \"That's when the excitement around AI really ramped up,\" said Ryan McCormack, an Invesco senior exchange-traded fund strategist. \n</p>\n<p>\n     The hype has driven companies such as <a href=\"https://laohu8.com/S/META\">Meta Platforms</a> and Amazon.com that have been building out AI capabilities, he said. Shares of the tech giants are up 154% and 65% in 2023, respectively. Microsoft, which has climbed 35%, has poured billions of dollars into OpenAI's ChatGPT, a chatbot that can answer difficult questions in seconds. \n</p>\n<p>\n     The furious rally in those stocks, long the market's biggest drivers, has fanned worries about market concentration. The 10 biggest stocks in the S&amp;P 500 now comprise more than a third of the market, according to Dow Jones Market Data. They represented 27% of the index at the start of the year and less than a quarter in 2000. \n</p>\n<p>\n     \"The market story that rhymes most with the internet bubble is the concentration of leadership,\" said Mike Edwards, deputy chief investment officer of Weiss Multi-Strategy Advisers. \n</p>\n<p>\n     Nvidia's second-quarter earnings report, due Aug. 23, will provide insight into whether its inexorable rise is well-rooted in demand for chips, or a product of hype. The stock gained 24% in the trading session after its earnings reported in May, and 14% the day following February's results. \n</p>\n<p>\n     Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&amp;P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over the last decade of 10 times, according to Dow Jones Market Data. \n</p>\n<p>\n     The nascency of AI programs such as ChatGPT means it is likely too early to determine whether Nvidia can raise revenue in line with the eye-watering valuation investors have slapped on its shares. If the company's growth isn't enough to reflect its price, the stock could crater. \n</p>\n<p>\n     A basket of 43 high-multiple internet stocks -- those worth at least $5 billion that traded at 25 times their revenue at the turn of the century -- crashed 80% over the next two years, according to Sparkline. \n</p>\n<p>\n     The companies weren't duds, either. Their sales grew 10-fold in the ensuing two decades. But investors were badly bruised from the bust: The shares returned an average of 16% in that time span. The S&amp;P 500 returned 284%. \n</p>\n<p>\n     The basket included Amazon and Microsoft, both darlings of today's market, along with Cisco Systems, then one of the largest companies in the Nasdaq-100. The networking- equipment maker traded as high as 38 times its sales in early 2000. Cisco has returned 43% since the start of the century -- it is down 0.4% when excluding dividends. \n</p>\n<p>\n     \"Valuations matter,\" said Wu. \"Investing in stocks exposed to rapidly growing technologies only works if the growth is not already priced in. Unfortunately, in periods of euphoria, the market has a tendency not only to price in potential growth, but to greatly overextrapolate it.\" \n</p>\n<p>\n     One reason why this rally might lack the boom-and-bust nature of the dot-com bubble: The beneficiaries of artificial intelligence were the stocks already shining this year. Investors were flocking to big tech in the first quarter, seeking shelter in strong balance sheets and cash flows. \n</p>\n<p>\n     Tech companies are also benefiting from the expected end of the Federal Reserve's interest-rate campaign and resilient consumer spending. Cyclical sectors of the broader market have begun to catch up now that recession fears are fading. \n</p>\n<p>\n     \"It's not like 1999 when investors were racing to hot IPOs for companies that had no chance of making money,\" said Edwards. \"Today's winners are disciplined, enormous companies that have moats in place and data sets to exploit.\" \n</p>\n<p>\n     Write to Eric Wallerstein at eric.wallerstein@wsj.com \n</p>\n<pre>\n \n</pre>\n<p>\n  (END) Dow Jones Newswires\n</p>\n<p>\n  August 11, 2023 00:00 ET (04:00 GMT)\n</p>\n<p>\n  Copyright (c) 2023 Dow Jones &amp; Company, Inc.\n</p>\n</font>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0175139822.USD":"AB FCP I Global Equity Blend A USD","BK4559":"巴菲特持仓","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU1430594728.SGD":"Eastspring Investments - Global Low Volatility Equity AS SGD","LU1066053197.SGD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM3\" (SGDHDG) INC","BK4020":"通信设备","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","NVDA":"英伟达","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","BK4550":"红杉资本持仓","MSFT":"微软","BK4141":"半导体产品","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","UPRO":"三倍做多标普500ETF","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","BK4551":"寇图资本持仓","LU0149725797.USD":"汇丰美国股市经济规模基金","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","SH":"标普500反向ETF","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","BK4560":"网络安全概念","BK4549":"软银资本持仓","CSCO":"思科","IVV":"标普500指数ETF","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","SSO":"两倍做多标普500ETF","BK4548":"巴美列捷福持仓","BK4529":"IDC概念","LU0234570918.USD":"高盛全球核心股票组合Acc Close","OEF":"标普100指数ETF-iShares","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","SPXU":"三倍做空标普500ETF","LU1267930730.SGD":"富兰克林美国机遇基金AS Acc SGD (CPF)","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","BK4528":"SaaS概念","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","BK4554":"元宇宙及AR概念","SDS":"两倍做空标普500ETF","LU0056508442.USD":"贝莱德世界科技基金A2","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","SPY":"标普500ETF","BK4567":"ESG概念","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC",".SPX":"S&P 500 Index","OEX":"标普100","BK4566":"资本集团"},"source_url":"https://dowjonesnews.com/newdjn/logon.aspx?AL=N","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2358086337","content_text":"By Eric Wallerstein \n\n\n  The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year. \n\n\n     Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&P 500 has gained 16%. \n\n\n     For some investors, the surge in Nvidia -- now the fifth-largest U.S. company by market value -- is difficult to chalk up to anything but speculative mania. Its weighting in the benchmark stock indexes means everyday investors are at the whims of its trajectory, whether they believe in AI's potential or not. \n\n\n     \"There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears,\" said Kai Wu, founder and chief investment officer of Sparkline Capital. \"Investors can benefit from innovation-led growth, but must be wary of overpaying for it.\" \n\n\n     Nvidia is the primary producer of semiconductors backing artificial-intelligence systems. The company forecast a record $11 billion in sales for the recently ended quarter when it reported results in May, catching analysts off guard with the projected surge in customer demand. \n\n\n     \"That's when the excitement around AI really ramped up,\" said Ryan McCormack, an Invesco senior exchange-traded fund strategist. \n\n\n     The hype has driven companies such as Meta Platforms and Amazon.com that have been building out AI capabilities, he said. Shares of the tech giants are up 154% and 65% in 2023, respectively. Microsoft, which has climbed 35%, has poured billions of dollars into OpenAI's ChatGPT, a chatbot that can answer difficult questions in seconds. \n\n\n     The furious rally in those stocks, long the market's biggest drivers, has fanned worries about market concentration. The 10 biggest stocks in the S&P 500 now comprise more than a third of the market, according to Dow Jones Market Data. They represented 27% of the index at the start of the year and less than a quarter in 2000. \n\n\n     \"The market story that rhymes most with the internet bubble is the concentration of leadership,\" said Mike Edwards, deputy chief investment officer of Weiss Multi-Strategy Advisers. \n\n\n     Nvidia's second-quarter earnings report, due Aug. 23, will provide insight into whether its inexorable rise is well-rooted in demand for chips, or a product of hype. The stock gained 24% in the trading session after its earnings reported in May, and 14% the day following February's results. \n\n\n     Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over the last decade of 10 times, according to Dow Jones Market Data. \n\n\n     The nascency of AI programs such as ChatGPT means it is likely too early to determine whether Nvidia can raise revenue in line with the eye-watering valuation investors have slapped on its shares. If the company's growth isn't enough to reflect its price, the stock could crater. \n\n\n     A basket of 43 high-multiple internet stocks -- those worth at least $5 billion that traded at 25 times their revenue at the turn of the century -- crashed 80% over the next two years, according to Sparkline. \n\n\n     The companies weren't duds, either. Their sales grew 10-fold in the ensuing two decades. But investors were badly bruised from the bust: The shares returned an average of 16% in that time span. The S&P 500 returned 284%. \n\n\n     The basket included Amazon and Microsoft, both darlings of today's market, along with Cisco Systems, then one of the largest companies in the Nasdaq-100. The networking- equipment maker traded as high as 38 times its sales in early 2000. Cisco has returned 43% since the start of the century -- it is down 0.4% when excluding dividends. \n\n\n     \"Valuations matter,\" said Wu. \"Investing in stocks exposed to rapidly growing technologies only works if the growth is not already priced in. Unfortunately, in periods of euphoria, the market has a tendency not only to price in potential growth, but to greatly overextrapolate it.\" \n\n\n     One reason why this rally might lack the boom-and-bust nature of the dot-com bubble: The beneficiaries of artificial intelligence were the stocks already shining this year. Investors were flocking to big tech in the first quarter, seeking shelter in strong balance sheets and cash flows. \n\n\n     Tech companies are also benefiting from the expected end of the Federal Reserve's interest-rate campaign and resilient consumer spending. Cyclical sectors of the broader market have begun to catch up now that recession fears are fading. \n\n\n     \"It's not like 1999 when investors were racing to hot IPOs for companies that had no chance of making money,\" said Edwards. \"Today's winners are disciplined, enormous companies that have moats in place and data sets to exploit.\" \n\n\n     Write to Eric Wallerstein at eric.wallerstein@wsj.com \n\n\n \n\n\n  (END) Dow Jones Newswires\n\n\n  August 11, 2023 00:00 ET (04:00 GMT)\n\n\n  Copyright (c) 2023 Dow Jones & Company, Inc.","news_type":1},"isVote":1,"tweetType":1,"viewCount":170,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}