Alphabet's Discounted Valuation Is an Antidote to Tariff Risk
Feb 04, 2025 - financialpost.com
The article discusses Alphabet Inc.'s resilience amid geopolitical tensions, particularly in response to Beijing's antitrust probe following U.S. trade tariffs. Despite these challenges, Alphabet's strong growth and attractive valuation provide a buffer against uncertainties. Analysts highlight Alphabet's lessened susceptibility to tariff risks compared to hardware-focused tech companies, thanks to its robust cloud and advertising markets. The company's stock has been performing well, trading near record levels and considered a bargain among major tech firms. Alphabet's revenue growth is expected to accelerate, with its core businesses like Google Search and Google Cloud contributing significantly. Additionally, Alphabet's other ventures, such as YouTube and Waymo, are seen as valuable assets, providing further stability.
The article also notes that Alphabet's stock has outperformed the Nasdaq 100 Index, maintaining a lower valuation due to competition in AI and antitrust pressures. However, its high-margin businesses, including cloud services and YouTube, act as stabilizers against potential volatility. The company's revenue growth is projected to increase, supported by positive signals from the online advertising market. Alphabet's diverse portfolio, including its AI and self-driving units, adds to its long-term value, with analysts viewing these segments as significant contributors to its overall worth.
Key takeaways:
Alphabet Inc. is seen as a bargain among megacap tech firms due to its durable growth and attractive valuation, despite geopolitical uncertainties.
China has announced a probe into Alphabet's Google for alleged antitrust violations, focusing on the dominance of Google's Android operating system in China's smartphone sector.
Alphabet's revenue growth is expected to accelerate to 17.8% in 2025, with net earnings projected to grow by 12%.
High-margin businesses like Google Cloud and YouTube are considered "shock absorbers" against market volatility and potential tariff impacts.
