The Underdog in AI
Nvidia NVDA has been the poster child of artificial intelligence, but beneath the surface, Alphabet Inc GOOG GOOGL is quietly gaining ground, according to Raymond James Investment Management’s strategist, Matt Orton.
Orton, on CNBC’s Street Signs Asia, emphasized the underappreciated nature of Alphabet’s stock in the broader market.
Gemini: A Game Changer in AI
Orton highlighted Alphabet’s groundbreaking move with the launch of Gemini, touted as Alphabet’s largest and most potent AI model to date. This innovation has the potential to revolutionize customer service engagement, trend identification for targeted advertising, content creation, and productivity applications. The strategist dubbed Gemini, a “game changer” in the AI landscape.
The significance of Gemini stems from its ability to narrow the “GenAI gap.” Given the robust state of the U.S. consumer market, Gemini has the potential to fuel advertising revenue acceleration.
Attractive Valuations
Orton also underscored the fact that Alphabet’s stock is “trading at a really attractive valuation still, especially relative to some of the other Magnificent Seven.”
| Symbol | P/E FWD | PEG FWD | Price / Sales | EV / EBITDA | Price / Book | Price / Cash Flow |
| GOOG | 24.46 | 1.39 | 5.95 | 17.26 | 6.37 | 16.33 |
| TSLA | 75.56 | 4.5 | 7.94 | 49.33 | 14.3 | 62.84 |
| NVDA | 42.67 | 1.01 | 28.74 | 57.91 | 38.74 | 68.51 |
| MSFT | 33.44 | 2.29 | 12.77 | 25.07 | 12.62 | 29.32 |
| META | 25.01 | 1.25 | 7.32 | 16.6 | 6.45 | 13.92 |
| AMZN | 55.43 | 2.05 | 2.76 | 22.21 | 8.42 | 21.5 |
| AAPL | 28.11 | 3.08 | 7.62 | 22.63 | 46.43 | 26.11 |
We looked at valuation ratios for the ‘Mag 7’ stocks, namely, Alphabet, Tesla Inc TSLA, Nvidia, Microsoft Corp MSFT, Meta Platforms Inc META, Amazon.com Inc AMZN and Apple Inc AAPL. Clearly, forward P/E multiple appears to favor Alphabet’s stock.
A Hidden Treasure
As Alphabet continues to unveil its AI capabilities and solidify its position in the tech landscape, investors might find a hidden treasure in this underappreciated yet formidable player, potentially reaping significant rewards in the evolving AI-driven market of 2024 and beyond.
