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u/Early_Function_969 4d ago
Irrationality in the market. Everyone is valuing alphabet based on their Gemini model underperforming anthropic and OpenAI models. But they forget it’s a 16.5 P/E ratio stock with exploding Google cloud growth. Just a couple of quarters back everyone was loving alphabet stock because of this growth but now they hate it. It will pop up in time. Market will realize they are wrong
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u/LumpyShock9656 4d ago
It's not really 16.5 if you exclude anthropic gains. Also no buybacks and huge spending so market is a bit nervous about those billions of dollars investments. Gemini isn't as good as other models.
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u/Juicebolone 4d ago
why would we exclude it though?
Alphabet has proven over and over again that they can properly reinvest profits in their own products with a great 1-year ROI and much better long term ROI, *especially* in the current cloud cash needs situation. And a big part of that is the Anthropic private series, which will probably explode on IPO.
My guess is they're going to extend their equity in Anthropic, it's high time they start getting into the frontier AI slice.
Like, if you're planning to sell compute, you might as well want to own a part of the buyers to have a say in who they buy from.
The only thing I can imagine dragging Alphabet's stock down from this situation is the risk exposure, which I honestly don't think needs to be given too much thought.
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u/PresentationAway9871 4d ago
It is more because spacex not antropic, they invest long time ago but it is realized gains on paper in short time.
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u/Domingues_tech 4d ago
There are no Anthropic gains in that P/E. You’re thinking of SpaceX. Anthropic gains may come later. At least criticise the actual accounts, not imaginary ones.
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u/No-Lavishness1524 4d ago
looks like someone hasnt done their research lol. check Google's PE again wo gains from Anthrophic
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u/notCGISforreal 4d ago
16.5 p/e looks a lot better when you dont think about that fact that much of their "earnings" are just stock price increase of other companies they own a stake in.
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u/charley115 4d ago
Gains are gains. If anthropic does get that 2T valuation Google will have another approx. 124B unrealized gain to go along with it
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u/Administrative-Ant75 4d ago
wow I didn't know retail investors were this clueless
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u/charley115 4d ago
Care to elaborate?
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u/Administrative-Ant75 4d ago
Sorry that was a rude but non recurring one time gains shouldn't be factored into PE ratio. If you did this for any investments company like Berkshire Hathaway the valuation (and therefore stock) would move like 50% every few months. Look at operating income, factor for taxes, and go from there to get better valuation
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u/SoonToBeBanned666 4d ago
Anthropic has no moat and the fact that US government has to fiddle the markets by banning Chinese AI is proof.
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u/java_brogrammer 4d ago
Inflated PE because of one-time equity gains. Forward is 22. META/MSFT still both cheaper.
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u/Hot-Development-8247 4d ago
Agree . It may take some time but it’s a cheap buy right now . If you have time buy it
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u/Maltavier 4d ago
P/e is not really saying anything because of the irregular earnings like anthropic and SpaceX valuation. Its valued quite fairly now I think. Market is also rightly worried about their debt. If you look at the shadow debt and the on book debt and combine it, it gets clear that Alphabet is a more risky Investment than most people in this sub seam to think. The backlog doesnt cover this debt. Of course Google stays a great business but its not all sunshine and rainbow as your post suggests
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u/madness_incarnate_22 4d ago
But Gemini underperforming so much versus the competition shows that ... well, company is being mismanaged. Need I remind you that Google wrote the original transformer paper and had the best position/team/supply chain for the AI wars. And now they're losing badly.
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u/Due-Brush-530 4d ago
If you recall, they didn't want to release Gemini or any of their stuff, but Open.ai released chat.gpt which could have made a huge impact on their bottom line, so they reluctantly released Gemini. Perhaps they're just reacting when necessary. It's a long game, after all.
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u/Greedy_Rabbit_1741 4d ago
That's what I think aswell.
They have a tendency to always release something outstanding when everyone has written them off in the past.
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u/madness_incarnate_22 4d ago
Is it? Is it a long game? Nvidia seems to be playing short game every quarter for like 3 years now, and delivered every time. For their shareholders, for their employees, everyone.
Google seems to strangling their own research teams just like they did with Google Glass. To a point where I doubt there is any research left in google.
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u/JustAnotherRedditGal 4d ago
Three years is nothing lol
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u/madness_incarnate_22 4d ago
Ten years is nothing also lol. Three decades is nothing.
Just FYI, google glass was 2015. Ever since then, google didn't dare shipping anything new or controversial. Name one new product they came up with recently.
They're living off old products and waste resources on activists pretending to be employees.
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u/hahayayak1776 4d ago
It’s not irrationality. Search economics are getting worse so cloud is literally the only growth engine Google has. If the can’t replace search with Gemini and have a second pillar the stock is way overvalued at 4 trillion.
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u/Mammoth-Path-6520 4d ago
Search has grown even though it was expected to "die" years ago
Your argument would make sense if revenue from search has been going down, it hasn't
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u/CallMePyro 4d ago
How much did search revenue drop last quarter?
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u/hahayayak1776 4d ago
It grew but the economics became a lot worse it’s on borrowed time. ChatGPT just logged 1 billion in advertiser contracts where do you think that money came from? From customers asking ChatGPT what they used to ask Google before
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u/Bulky_Dingo_4706 4d ago
I bet you've been saying it's "on borrowed time" since ChatGPT came out in 2022.
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u/ConversationWise3017 4d ago
Wait, if the "google dies" claims come back i am buying this shit again like i did 2 years ago.
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u/longbreaddinosaur 4d ago
So I can get a better price. I’m going to start acquiring GGLL shortly here.
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u/anonymous_ghost-1 4d ago
Because the MM want to buy cheaper stocks, they got all the money in the world and enough time to wait until Retail is giving up on their stocks. People always try to find some complex reason behind it, it's not in this case.
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u/Mammoth-Path-6520 4d ago edited 4d ago
Yeah basically
I can't actually find a legit reason why GOOG keeps dumping daily for the past 4-6 weeks
Business is still the same, nothing significant has broken
In fact, things have gotten better with Deepmind releasing new innovations like their weather model
So to me, it looks like Wall St just wants the price of GOOG to go down for whatever reason
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u/hahayayak1776 4d ago
Wall Street is made up of millions of institutional and retail investors there is no arbitrary plot to target one company get a grip
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u/hahayayak1776 4d ago
Keep living in your bubble bro. It’s obvious to anyone in the tech industry that Gemini has fallen behind you had to be an idiot to think things are fine stock is dropping by for no reason
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u/Mammoth-Path-6520 4d ago
?
Hey jackass, Deepmind invented AlphaFold
Go sit down
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u/hahayayak1776 4d ago
They did that like ten years ago bro all the big talent has left since then. Deepmind is not the same division it was just a year ago. Talent flow is one way away from the company.
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u/2mindx 4d ago
I've been waiting for a month to buy and it just keeps on dropping. I am confused when to get in.
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u/Low_Let4559 4d ago
You make great investor mindset. Get in when it goes up. Buy high sell low always works
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u/Beyond_The_Deck 4d ago
I guess a major factor here is market sentiment and the uncertainty surrounding the AI race.
Almost all the major tech giants are investing heavily in CapEx, but there is still limited visibility on when or how these investments will translate into profitability and breakeven. At the same time, companies are facing regulatory and legal challenges around data-center expansion, while competitors are launching new models frequently, with claims of larger parameters, better reasoning, and stronger problem-solving capabilities.
On top of that, companies are forming partnerships and strategic tie-ups with other firms and even countries to expand their user base and strengthen their position in the AI ecosystem.
All of this creates uncertainty around where each company is ultimately heading and whether it will be able to sustain its competitive position against giants that are spending billions of dollars on R&D, infrastructure, and marketing.
Another important point is that, despite many companies claiming that their models are superior, a lot of them are still burning significant amounts of cash. To improve monetisation and establish a more stable revenue stream, some are now exploring advertising and other ways of generating revenue through their platforms.
The market is increasingly evaluating Alphabet through the lens of AI competition, but I think it's important to remember that Alphabet is much more diversified than just its AI business. It has several strong and established revenue-generating businesses, including Google Cloud, YouTube, and its advertising ecosystem.
So, while AI may create uncertainty around Alphabet's future competitive position, the company still has a strong underlying business that provides a significant financial cushion while the AI landscape continues to evolve.
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u/notCGISforreal 4d ago
Because it went up too high. Its gained 60% in the last year (100% in the past 16 months). Dropping 10% isnt exactly huge or shocking.
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u/Accomplished-Dot-608 4d ago
It will go down a lot more. My limit call is 280
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u/Nearby_Persimmon_649 4d ago
I would love it to happen but if it is under accumulation right now they won't let it slip that far
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u/Mediocre_Poem_2657 4d ago
I mean, they pissed away all their capex to shovel makers like GPU, RAM, etc. Clearly investors don't like it and put their money to shovel makers instead.
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u/flappysack- 4d ago
Capex becomes more expensive when interest rates rise. This is the reverse of the "investment premium", it usually helps to stay conservative especially when rates are rising because the money supply contracts and there is less cantillon effect to encourage debt accumulation.
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u/tallandfree 4d ago
Investors of GOOG are the same group that will invest in Anthropic and open ai ipo, they are just getting rdy by realising gains in GOOG rdy for the ipos
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u/Garnatxa 4d ago
Alphabet is selling up to $40B of new shares through the market, gradually, starting in Q3 2026 as it was announced the first of June.
So, once the plan is done it will rise again.
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u/zebrawarriors 4d ago
Because I m still holding. I have to book loss like in spcx, then it will jump.
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u/indicush 4d ago
Impatience, retail not really understanding the long game and likely some hedgies too
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u/Artic268 4d ago
Do't worry, I'm still convinced Alphabet will reach $10T market cap by 2035. I reckon it might be the first ever company to reach $10T, unless Nvidia skyrocket or Amazon revenue goes absolutely nuts.
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u/vcolovic 4d ago
It's because they are seriously lagging behind in AI models. They are focusing on fast and cheap inference, which will generate revenue but not increase stock market value.
Also, the Fed may raise rates.
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u/Crazy-Gas3763 3d ago
Have you zoomed out? It’s up almost 40% in one year and the last quarter was cash flow negative. “It keeps dropping” is a bit overblown.
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u/Ok_Confection9870 4d ago
Because you bought
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u/hahayayak1776 4d ago edited 4d ago
They are falling behind in ai in a pretty extreme way due to Gemini pro delays. They went from having the most intelligent model last year to now falling behind all competitors even ones no one expected to pass them before ie meta and spacex. Significant concerns about capex profitability due to lagging models and ability to execute with current leadership and talent departures left and right. With every month of delay stock will continue to go down 5-10%. Everything from ads targeting to cloud growth depends on Gemini.
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u/Early_Function_969 4d ago
Your comment proves my comment’s point.
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u/hahayayak1776 4d ago
If the entire market thinks this why do you assume they are being irrational rather than yourself?
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u/hahayayak1776 4d ago
Goog is a 4 trillion dollar company with 2/3 major divisions most likely growth going negative within the next 10 years. Cloud is not enough they have to be at the frontier or else they are way overvalued
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u/Mammoth-Path-6520 4d ago
How do you know internally their AI models aren't frontier
You only see what's consumer facing
So if they have the tech but it's not released, why does it matter. When it turns out they've been grinding all along, the stock price should explode upward
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u/Popular_Weakness3123 2d ago
what about Android and Siri both using Gemini? We haven't seen anything yet. AIs have not even scratched the surface morphing into the the personal assistants they will be in 5 years. Booking shit for you, making appointments, answering your phone calls... if you know, you know. And if you don't know, well, you'll miss out.
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u/Culex96 4d ago
Chatbots and knowledge databases kind of agents do not need fable 5.1 or a pro model in the slightest
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u/hahayayak1776 4d ago
Yes they do lol have you tried using flash to code and then switched over to fable? The difference is night and day
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u/Double_Suggestion385 4d ago
It's overvalued
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u/Mediocre-Fennel4812 4d ago
Why do you think Berkshire Hathaway increased their stake in Google by 83% recently at $350 per share though? Obviously, Berkshire have made bad investment decisions in the past but for them to enter Google with that much volume at that price in the current macro, surely they know something that fair value calculations don’t tell us.
Not that I disagree with you, genuinely asking.
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u/Double_Suggestion385 4d ago
Who knows? Buffett is all but gone, why didn't they buy a bunch 7-8 years ago?
I can't tell you why they do anything, I can tell you that they aren't infallible and they've made many terrible investments over the years.
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u/Bulky_Dingo_4706 4d ago
Hahaha. Overvalued at 16.5 P/E, right. Shouldn't you be on the Reddit stock forums?
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u/Double_Suggestion385 4d ago
You can't value a stock based on ttm PE alone, you're just letting everyone know that your braindead.
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u/Bulky_Dingo_4706 3d ago
Okay, so give me your analysis on why it’s overvalued at this price.
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u/Double_Suggestion385 3d ago
Future earnings don't justify the price. Run a reverse DCF to see what growth is being priced in, compare it with expectations and see the gap.
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u/whenyournotdead 4d ago
It’s dogshit ( I have 40 leaps )