Key Points
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Alphabet (NASDAQ: GOOGL) has notably underperformed its mega-cap tech peers this year, yet a potential DOJ-driven breakup could unlock significant shareholder value by spinning off high-performing segments.
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Despite rising AI competition and concerns over OpenAI launching a browser, Alphabet retains a massive advantage through its entrenched search brand and ability to seamlessly drive traffic to its AI platform, Gemini.
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The company’s AI-first integration into its core search product is eroding traditional media link visibility, further consolidating user attention and reinforcing Google’s ecosystem dominance.
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Watch the Video
Transcript:
[00:00:04] Douglas: Google stock has really underperformed, not just the market, but you know, if you look at the mega cap tech companies, it’s underperformed them
[00:00:12] Lee Jackson: Really?
[00:00:13] Douglas: they’re
[00:00:13] Lee Jackson: Yeah.
[00:00:14] Douglas: You’ve got OpenAI may start its own browser. You’ve got the government may try to, you know, break Google up.
[00:00:22] Douglas: You’ve got the question of whether people are using AI to do the equivalent of search. are two reasons I think Google is cheap right now. Corporate breakups are often better for the shareholders than keeping a company together. People, they often unlock value, and if that means that if I have a hundred dollars Google share and they break it up and that gets divided into four companies, I bet you those four companies are worth 120 bucks the day they start trading.
[00:00:52] Lee Jackson: Yeah, and I’ll, and I’ll bet you that every Google shareholder, if they’re smart, you know, ’cause they’ll get a chunk of the spinoffs, I guarantee you they’ll want to hang on to ’em.
[00:01:04] Douglas: I think they’ll want to hang on to ’em. I think that the federal government may not be doing Management a favor, but I think they’re doing Google shareholders a favor. The other thing about Google that I, I think, that people don’t look at is, look, artificial intelligence, is great. It’s a good toy for a lot of people.
[00:01:24] Douglas: I mean, if you really, really know how to use it, it’s ridiculous. It’s awesome. But Google has something that is very important, and that is a brand. When people think about searching the internet, they go to Google because they, because they Google things. it is very hard to retrain people. To use artificial intelligence to do this.
[00:01:49] Douglas: I’m not saying it can’t be done, I’m not saying that a lot of people won’t do it. Over time, the people are used to going on to a computer. I don’t care if it’s Google’s web browser. I don’t care if it’s on the smartphone or on a Mac or on a a PC or whether it’s on the Windows iOS. still what people, it will take a long, long time to erode the brand.
[00:02:14] Lee Jackson: Yeah, and you know that’s one of the most salient points ever, Doug, because in addition to that, think about Google’s advantage of having, the minute you Google something, their AI pops right up. So they kind of have the advantage, you know, of, of having a built in window of AI for, for people that, like you said, are accustomed to Googling something.
[00:02:38] Lee Jackson: So that may be a huge advantage for them, even if they have to split stuff up.
[00:02:42] Douglas: you’re, you’re right. I
[00:02:43] Lee Jackson: I
[00:02:43] Douglas: thought of that. What it is, is Google is now driving people to, to their AI product
[00:02:50] Lee Jackson: right.
[00:02:50] Douglas: and, how much, you can’t get any more exposure than that
[00:02:55] Lee Jackson: No,
[00:02:55] Douglas: than, than, than basically going through their own portal and seeing This is destroying the publishing business it used
[00:03:05] Lee Jackson: indeed.
[00:03:06] Douglas: if you search something down below, there’d be a lot of links to the New York Times, or if, if
[00:03:11] Lee Jackson: Right, right, right, right.
[00:03:12] Douglas: now it’s not.
[00:03:13] Douglas: It’s Geminis of the subject and the links are buried someplace else. So,
[00:03:21] Lee Jackson: I mean,
[00:03:21] Douglas: I
[00:03:21] Lee Jackson: you can find them, but it, it’s not what you see right away. Exactly. Yeah.
[00:03:26] Douglas: So media companies have been a sell forever. Now they’re even a bigger sell,
[00:03:30] Lee Jackson: Yeah. I, I think you’re right. And because ultimately. Even the big media company know they have to be in the game some way, shape or form. The, some are just going to get taken off the map, you know, they’re just not gonna be in there. But I think you’re right. And I think at Google’s let’s see where it’s currently trading is, there’s been, it was one of the three, magnificent seven that’s not up this year, along with Apple and, and Tesla, and.
[00:04:03] Lee Jackson: It’s probably one of the best tech, you know, big mega cap tech, tech values you can buy now, especially in front of the potential breakup.
[00:04:12] Douglas: listen. I think, I think it’s a, I think it’s an incredible buy.
[00:04:16] Lee Jackson: Okay, so our, our advice here is, and we’ll get back to everybody, is at current levels, Google even if you just go in and buy partial positions now, it’s a good opportunity from an entry level
[00:04:29] Douglas: Yeah.
[00:04:29] Lee Jackson: price.
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