Google’s parent company - Alphabet is available at a very attractive P/E today. It’s P/E ratio currently is 22.1 while Amazon is available at a P/E of ~42. Both companies have roughly the same market cap. Amazon’s gross revenue is double that of Google but both companies have same EBITDA.
Thinking of moving investments from Amazon to Google or buy more of Google as the share price looks attractive right now.
What do you guys think?
I think that Alphabet is currently a good buy.
Alphabet reported robust financial results in Q3 2024, with a 15% revenue increase driven by strong performances across its core businesses, including search, cloud services, and YouTube. Analysts have raised their price targets, reflecting confidence in Alphabet’s ability to maintain its leadership in artificial intelligence (AI) and cloud computing.
The company’s diversified revenue streams and substantial cash flows position it well to invest in emerging technologies and expand its market presence. For instance, Alphabet’s cloud business is projected to generate approximately $20 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025, potentially valuing it at $325 billion.
That said, there are risks. The DOJ is pushing for significant remedies that could include selling off Chrome or changing Android’s operating model, which might impact ad revenue and market share. Additionally, the rise of generative AI technologies presents competitive threats. Competitors like ChatGPT will reduce traffic to Google’s search engine, affecting its advertising model
Overall, the fundamentals are strong, but there are regulatory and competitive risks. For long-term investors who can stomach some uncertainty, it looks like a great opportunity.
Google at a P/E of 22.1 is not just cheaper than Amazon but also below the S&P 500 average (~25). Historically, it trades closer to 30-35, so this looks lGoogle at a P/E of 22.1 is not just cheaper than Amazon but also below the S&P 500 average (~25). Historically, it trades closer to 30-35, so this looks like a solid value play. Looks like a “buy” moment for Google.
Alphabet’s getting hit hard with global regulations—Digital Markets Act in the EU, US antitrust cases, etc. Amazon faces scrutiny too, but its diverse biz model could absorb the shock better. Amazon could handle regulation risks better, so tread carefully with Google.
Amazon has a lot going for it—AWS, ads, Prime subscriptions—all balancing out risks. Alphabet’s ad revenue is awesome but feels like all eggs in one basket. Hold off on Google if you prefer a more diversified company like Amazon.
Amazon’s revenue may be double, but their net profit margin is under 5%, while Alphabet’s sits above 20%. More revenue doesn’t always mean more returns. Google seems like the better bet right now!
Digital ads (Google’s bread and butter) are projected to grow ~10% yearly till 2028. Meanwhile, Amazon’s e-commerce growth has slowed since COVID highs, and AWS growth isn’t as explosive as before. Go for Google if you want to ride the ad market growth.
Amazon spends massively on logistics and data centers. That’s real infrastructure. Google, while R&D-focused, spends less on this kind of scaling. Amazon’s reinvestments might pay off bigger in the long run.
Amazon’s higher P/E is because it reinvests like crazy, which kills current profits but builds future growth. Google’s already optimized for profits, so less room for big future jumps. Stick with Amazon for long-term growth potential.
Sure, Google’s ahead with Bard and DeepMind, but AWS Bedrock + Trainium silicon = serious competition. Plus, AWS already has huge enterprise adoption for AI tools. Amazon might be the smarter AI play.
if one is looking to play AI, Ads & Search growth, allocating some % out 100 across Microsoft, Amazon, Google & Meta seems a better diverse strategy.
Amazon has upped it’s stake in Anthropic for GenAI by more $4Bn and Google will fight for Chrome decoupling from its suite with DOJ! Meta’s engine is leveraging GenAI more & more and will bring in more ad revenues across content type(s) as per last earnings call discussion I read!
I’d rather spread my risks/bets across spectrum.
I think Alphabet is a very good stock for long term.
Ohh I did not know about Anthropic! Will read more on it.
sure, Akash!