Prediction: Alphabet Stock Will Soar After July 23
The market is worried about Google Search's market share.
Several popular generative AI models are releasing search alternatives.
Google Search's results showed no signs of weakness in the first quarter.
10 stocks we like better than Alphabet ›
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) has an important date coming up on the calendar: July 23. After the market closes on that day, it gives investors an update on Q2 results, and I think these figures could be the catalyst Alphabet stock needs to send it soaring.
Alphabet is currently one of the most disliked big tech stocks on the market, and has a fairly cheap valuation compared to its peers and the broader market. The market is particularly concerned about one item, and if Alphabet provides investors with good news on this front, the stock could be ripe for a surge.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Alphabet trades at a deep discount to its peers and the broader market
Alphabet has multiple companies underneath its umbrella, but the largest (and most important) is Google Search. Coincidentally, this is also the segment that investors are the most worried about, which is why the stock trades at a discount to its peers.
GOOG PE Ratio (Forward) data by YCharts
Although it's recovered from its lows, Alphabet's stock still trades for less than 19 times forward earnings, which is far less than every other big tech stock trades for. Furthermore, the S&P 500 trades for 23.7 times forward earnings, so it's valued at a significant discount to the broader market. This conveys deep fear about Alphabet's future, as its past has been quite strong.
In Q1, Alphabet's revenue increased 12% year over year, while diluted earnings per share (EPS) rose an impressive 49%. Those are strong results, and if any other big tech company posted earnings like that, they'd have a premium valuation. However, investors are worried about Google's potential to lose market share.
The primary concern on Wall Street is that Google Search is poised to be disrupted by generative AI. More consumers are starting to use generative AI instead of Google Search, which could cause its ad revenue on the platform to decline. We've already seen some effects of this occur, as Google's search engine market share fell below 90% for the first time since 2015. Additionally, rumors suggest that various generative AI firms are set to launch artificial intelligence (AI)-first web browsers that would threaten Google Chrome.
These are all massive headwinds for Google Search, but they haven't shown up in the results yet.
All the Google Search fears haven't materialized yet
In Q1, Google Search's revenue rose 10% year over year. That's in line with where a mature business should be growing, and at least from a financial standpoint, all the fears seem to be unfounded.
One thing that could be occurring is confirmation bias, where Wall Street analysts and other people in the tech realm have replaced Google with generative AI, but they've forgotten about the vast majority of the population that is never going to make the switch to generative AI because the traditional Google Search techniques ingrained in their internet behavior works just fine for them. Furthermore, Google implemented AI search overviews, which provide a generative AI-powered overview of the Google Search results.
For the vast majority of the population, this could be enough AI to keep them on the platform, which will cause Google Search to maintain its dominance.
I think this is the most likely outcome, and with each passing quarter of Google Search posting strong results (which I believe it will do in Q2), this thesis will start to become more widely accepted.
However, if you see Google Search revenue start to slip, don't be surprised if the stock sells off drastically, as it would be a confirmation of the bear case. I don't think that will happen, and I firmly believe that Alphabet is a great buy today because of the bearish sentiment that has yet to impact Alphabet's financial results.
Should you invest $1,000 in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,281!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,415!*
Now, it's worth noting Stock Advisor's total average return is 1,058% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 15, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CTV News
22 minutes ago
- CTV News
Canadians voice frustrations with CRA over delays accessing benefits, refunds
Canada Revenue Agency (CRA) national headquarters is seen in Ottawa on Friday, June 28, 2024. THE CANADIAN PRESS/Sean Kilpatrick Chris Ellis has been trying to access his tax refund for four months. He's just one of dozens of Canadians who tell CTV News the significant wait times and other challenges contacting the Canada Revenue Agency (CRA) are preventing them from accessing certain benefits. From getting locked out of accounts for extended periods to getting stuck in a loop on the automated voice messaging system, many are expressing frustration with the agency's communication. In response to a CTV News article encouraging Canadians to reach out about their experiences with the CRA, several people shared that they have been waiting months to have their issues resolved. Ellis, for his part, was notified he'd been locked out of his CRA account after his bank, HSBC, was bought out by RBC, changing his direct deposit information and triggering a security alert. But Ellis says he didn't learn he'd been locked out until more than a month after he filed his taxes. 'I called CRA, and after listening to useless advice and options, I finally realized that I was in a loop: there was no way to reach an actual agent, and there was no option to select one,' Ellis wrote. 'This went on for about three weeks, with me calling in, going through the useless messages that took about six minutes, only to find out there were no agents available.' 'Super frustrating given that my account was locked out,' he added. Ellis then had to submit documentation through a portal — more than once — to prove his identity, but he still hasn't received his tax refund. 'So here I am, almost four months after submitting my tax return, and I am still in limbo,' he said. Ellis adds that CRA employees, once they can be reached, are 'very sharp' and 'very helpful,' but that the issue lies with the online and phone services. Delays causing 'extreme stress' 'I have been unable to reach a human at the CRA for weeks,' wrote Eric Enright in an email to CTV News. 'I have called periodically, maybe 10-15 times, and every time it just says all agents are busy and pushes me to an automated system that can't help. It is very frustrating.' 'I have no problem waiting hours, as I can just leave my phone beside me while I work,' Enright added. 'It's ridiculous, in my opinion, to not even give people the option of waiting.' Paul Medhurst said his tax return was filed mid-April but also has still not been processed. 'This failure of CRA is causing me extreme stress, worry and I'm losing a lot of sleep,' Medhurst said. '(I) worry of being broke and having my income held.' He added the delay in processing his tax return is preventing him from accessing monthly disability benefits. Sarah Kienitz wrote that it's taken months to receive the Canada Child Benefit, for which she's been approved. 'I attempted to contact the CRA three times to find out what the hold up was and to get clarity about why my taxes had been processed, but this was taking much longer,' she wrote. 'Each time I received a message that agents were busy and there was no option to even remain on hold, or any other way to contact them, except the chatbot that inevitably told me to call an agent with my queries.' 'I find it incredibly frustrating that I have tax deadlines and can be penalized for not completing on time, but the CRA can drag their heels almost four months before even telling me what my benefit entitlements are,' Kienitz also wrote. Others complained that CRA delays and communication challenges are preventing them from distributing estates for which they are the executor. Government departments tasked with finding savings Prime Minister Mark Carney, meanwhile, has pledged billions in new spending while promising to balance its operating budget. That will likely mean significant cuts to the size of the federal public service, according to the parliamentary budget officer. Ahead of a planned fall budget, government departments are being asked to find their own internal savings by the end of August, CTV News has confirmed. The Globe and Mail reported Friday the CRA is among the departments in the early stages of determining where to make cuts, as the union representing CRA employees is warning the cuts could 'disproportionately' affect call centres. Complaints about CRA wait times are not new. A 2017 report by the Auditor General found that the agency gave 'very limited access to its call centre services,' and that it blocked more than half the calls it received because it couldn't handle the volume. Also a 2023 report by the taxpayers' ombudsperson found the agency failed to properly communicate about the problem when thousands of people were locked out of their account two years prior. That report acknowledged specific challenges at the time, namely an overwhelming number of requests with the CRA while it distributed COVID-19-era relief benefits. 'This examination has highlighted a recurring issue at the CRA, where it communicates reactively rather than proactively,' the report concluded. In an email statement to CTV News, CRA spokesperson Charles Drouin said the agency is encouraging people to use online self-service tools — such as CRA My Account and the AI chatbot — before calling, because an estimated quarter of reported issues can be solved without an agent. 'We regret the inconvenience this situation may cause and are actively working to continuously improve both our phone and digital services,' Drouin wrote. 'By expanding self-service options, we aim to make it easier for Canadians to get the help they need quickly, securely, and without needing to speak to an agent.' Drouin added the CRA understands wait times can be frustrating, and that it values 'providing timely, high-quality service.' 'At times, demand for phone support can exceed our capacity and as a result, some callers are being redirected to automated self-service options,' Drouin wrote. Efforts to streamline certain processes are underway, including by changing some of its authorization requirements for individuals representing a client, according to a press release from the CRA this week. With files from CTV News' Stephanie Ha
Globe and Mail
22 minutes ago
- Globe and Mail
The Glaring Reason Why Warren Buffett Isn't Buying His Favorite ETF Right Now
Key Points Past clues point to the Vanguard S&P 500 ETF being Buffett's favorite exchange-traded fund. The legendary investor isn't buying his favorite ETF because of a dangerously high valuation. Buying the Vanguard S&P 500 ETF even at a high valuation could pay off over the long term, but only if you buy and hold. 10 stocks we like better than Vanguard S&P 500 ETF › Warren Buffett loves investing in stocks. However, he doesn't encourage all investors to follow in his footsteps. Instead, the Oracle of Omaha believes that the best approach for most people is to invest in funds rather than individual stocks. His premise is that it takes a lot of research to understand businesses well enough to put your money at risk investing in them. Exchange-traded funds (ETFs) own lots of stocks, so extensive research isn't required. And they can be bought and sold just like stocks. While there are thousands of ETFs on the market, Buffett especially likes one. But there's a glaring reason why even Buffett isn't buying his favorite ETF right now. Buffett's favorite ETF What is Buffett's favorite ETF? He has provided three big clues in the past. Clue No. 1 came in Buffett's 2013 letter to Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) shareholders. He wrote: "The goal of the non-professional should not be to pick winners -- neither he nor his 'helpers' can do that -- but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal." Buffett's second clue was in the same shareholder letter. And it was even more direct. He noted that his will specifies that 90% of the cash his family inherits when he dies be invested "in a very low-cost S&P 500 index fund." He then added, "I suggest Vanguard's." Now for the third clue. Buffett has owned only two ETFs in recent years in Berkshire's portfolio. One was the SPDR S&P 500 ETF Trust (NYSEMKT: SPY). The other was the Vanguard S&P 500 ETF (NYSEMKT: VOO), which has a slightly lower annual expense ratio than the SPDR ETF. Guess which one of these two S&P 500 (SNPINDEX: ^GSPC) index funds had more of Berkshire's cash invested in it? Pat yourself on the back if your answer was the Vanguard ETF. I think these clues clearly point to the Vanguard S&P 500 ETF as Buffett's favorite ETF. Why he isn't buying it However, Berkshire completely exited its position in the Vanguard S&P 500 ETF in the fourth quarter of 2024. (It sold all of its shares of the SPDR S&P 500 ETF Trust during the quarter as well.) Furthermore, the legendary investor has not bought a single share of his favorite ETF since. I don't think Buffett has changed his mind about the wisdom of investing in S&P 500 index funds. I don't believe he no longer views the Vanguard S&P 500 ETF as a good long-term pick for investors, either. So why isn't Buffett buying his favorite ETF? I think the glaring reason One metric that highlights the concerning valuation of the Vanguard S&P 500 ETF and the overall stock market is named after Buffett himself. The Buffett indicator measures the total market capitalization of all U.S. stocks as a percentage of U.S. GDP. Buffett stated in an article published by Fortune magazine in 2001 that when this indicator approaches 200%, investors are "playing with fire." Today, the Buffett indicator stands at nearly 209%. Granted, this metric uses the Wilshire 5000 index, which includes all U.S. stocks. However, the S&P 500 makes up around 80% of the total market capitalization of U.S. stocks. Should you buy this ETF even though Buffett isn't? Buffett's warning about "playing with fire" rings in my ears. So does his advice in the 2013 Berkshire Hathaway shareholder letter to "invest in stocks as you would in a farm." I probably wouldn't buy a farm when land prices were at all-time highs, especially if I suspected they would be cheaper in the not-too-distant future. That said, I don't think investors would make a huge mistake by buying the Vanguard S&P 500 ETF right now, even though Buffett isn't -- if they hold the ETF for the long term. I'd be surprised if the S&P 500 (and ETFs that track the index) aren't valued more highly 20 years from now than they are today. Buffett pointed out a risk to keep in mind, though. He wrote in the 2013 letter, "The main danger is that the timid or beginning investor will enter the market at a time of extreme exuberance and then become disillusioned when paper losses occur." If you think you'll succumb to the temptation to sell if the Vanguard S&P 500 ETF declines sharply, don't buy it. However, Buffett also provided an "antidote" to this potential problem. He suggested accumulating shares over time and never selling on bad news or major pullbacks. If you follow these rules, Buffett argued, you're "virtually certain to get satisfactory results." Should you invest $1,000 in Vanguard S&P 500 ETF right now? Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $687,149!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,060,406!* Now, it's worth noting Stock Advisor's total average return is 1,069% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025
Globe and Mail
22 minutes ago
- Globe and Mail
3 No-Brainer Artificial Intelligence (AI) Stocks to Buy on a Dip
Key Points Palantir has a huge opportunity with its AI-powered platform. Nvidia remains the king of AI infrastructure. Microsoft has been growing its cloud computing revenue quickly. 10 stocks we like better than Palantir Technologies › The market has returned to its highs, along with many top artificial intelligence (AI) names. However, another market dip could always be around the corner. Let's look at three top AI stocks that have made strong runs that would be good buys on a pullback. 1. Palantir With a high valuation but attractive growth opportunities, Palantir Technologies (NASDAQ: PLTR) is a stock that would be attractive on a dip. The company has emerged as one of the market's most compelling AI growth stories, and its momentum has been gaining speed. In the first quarter, Palantir posted its seventh consecutive period of accelerating growth, with revenue up 39%. The rise is being led by its U.S. commercial segments, which saw sales jump 71% and the value of future deals soar 127%. While there is a lot of talk about which company is building the best AI model, Palantir is focused on something far more practical: making AI useful. Its Artificial Intelligence Platform (AIP) uses AI models to help solve real-world problems. AIP does this by gathering data and then connecting it to physical assets and operational workflows, allowing companies to make AI more useful. As a result, the platform is being used for a growing list of purposes, including hospitals monitoring for sepsis, insurers using it in their underwriting, and energy companies optimizing their pipeline infrastructure. The company's largest customer is the U.S. government, which is starting to embrace AI to become more efficient. Last quarter, Palantir's government revenue climbed 45%. The company also recently landed a major deal with NATO, expanding into international defense just as Europe ramps up military spending. That gives it three potential growth engines: domestic commercial enterprises, the U.S. government, and now the international public sector. Yes, the stock is expensive by traditional metrics, but Palantir looks like it's laying the groundwork to become one of the next megacaps. As such, any pullback could be a great buying opportunity. 2. Nvidia Nvidia (NASDAQ: NVDA) has once again been helping lead the market higher. The company recently got good news when the Trump administration said the U.S. would ease chip export controls, allowing the company to resume selling its H20 chips to China. This will add billions in revenue. Nvidia remains the undisputed champion of AI infrastructure, with its graphics processing units (GPUs) the backbone of this build-out due to their fast processing speeds. And the company has sped up its development cycle to ensure it remains on top. Over the past two years, data center revenue has exploded from $4.3 billion to more than $39 billion -- incredible growth for a company the size of Nvidia. It held a 92% share in the GPU market in the first quarter. Its chips drive sales, but its secret weapon is its CUDA software. The company created the free platform in 2006 as a way to expand the use of GPUs beyond their original purpose of speeding up graphics in video games. While it was slow to play out in other end markets, Nvidia smartly pushed CUDA into academia and research labs, where early AI research was being done. That led developers to build directly on CUDA, leading to a growing collection of tools and libraries designed to maximize GPU performance for AI workloads. If shares of Nvidia dip, be ready to pounce. Data center spending continues to ramp up, and the company has a big opportunity in the automotive market, too, as autonomous and smart vehicles start to become more prevalent. 3. Microsoft Another company that has seen its stock run up in price is Microsoft (NASDAQ: MSFT). It dominates the enterprise software space with its Microsoft 365 suite of worker productivity products and has one of the leading cloud computing companies in Azure. The cloud remains the company's fastest-growing business, with the unit producing revenue growth of 30% or more each of the past seven quarters. Azure revenue jumped 33% last quarter (35% in constant currency), with nearly half of that coming from AI services. Growth could have been even higher, but Microsoft has been hitting capacity constraints. As such, it plans to ramp up capital expenditures (capex) in fiscal 2026 with a focus on adding GPUs and servers. It said those assets are more directly tied to AI revenue than buying the buildings that house them. That's a smart move that should support continued cloud computing momentum. Microsoft's $10 billion investment in OpenAI gave it an early AI lead, especially with Azure initially being granted exclusive access to its leading large language models (LLMs). Companies continue to be attracted to OpenAI's popular AI models, and Azure gives its customers direct access to them. It has also embedded OpenAI's models throughout its ecosystem to run its Copilot, which is gaining popularity with businesses. At $30 per enterprise user per month, it offers a lot of strong upside. That said, the OpenAI partnership is getting complicated. The exclusivity deal is over, and the two sides are reportedly negotiating new terms as the AI provider looks to restructure. Still, Microsoft remains entitled to 49% of OpenAI Global's profits up to a tenfold return on its investment -- potentially a huge payday. Microsoft remains in a strong long-term position. The stock's recent run-up makes it an attractive candidate to buy on any pullback. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $687,149!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,060,406!* Now, it's worth noting Stock Advisor's total average return is 1,069% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
