Google and investors in Alphabet are in for trouble. I’ll reveal two catalysts that could make Google stock dead money for years. 🤑 Get your 30% launch discount on my complete technical analysis and stock trading course [exclusive coupon code] https://mystockmarketbasics.com/tradestockspro While Tesla has been the big loser in the Magnificent 7 stocks lately, cracks are also starting to show for shares of Alphabet (GOOG). Two events over the last week signal a huge problem for the company and could mean the stock goes nowhere. First is the threat to the company’s search ad revenue from ChatGPT and other AI. Google books 76% of its total revenue from ads in search and there’s good reason to believe that ChatGPT could weaken Google’s search dominance. Google has been ridiculously slow at developing its own AI system and could lose out big time. Alphabet shares are trading expensively because investors are hoping for future revenue from its Waymo self-driving unit but that cash flow could disappoint as well. Waymo has the first-mover advantage but has stumbled in test markets and is taking a city-by-city approach. Tesla has the clear advantage in data to develop its model and is rolling out nationwide. What happens if that revenue growth slows on competition in search and if the earnings growth falls as the company is forced to spend billions more to bring its own AI up to speed? Not only will that revenue and earnings be lower but investors won’t be willing to pay those kind of higher multiples when growth is less clear. Let’s say Google revenue only grows by a 6% pace to $407 billion through 2027 and that higher costs mean earnings only grow by 10% to $9 a share for the year. Disappointing growth could take the valuation multiple down to the 4.2-times revenue and 17-times earnings investors were paying in 2022…that would mean a share price between $138 to $153 over the next three years. Flat or 3.5% annual return at best wouldn’t leave investors in the poor house but it would be a giant letdown from the 19% annualized return over the last five years. Quick-Start Guides! FREE Step-by-Step Guides to Get Started Fast! ⏩ Make an Investing Plan Right for YOU! 5-Minutes to a Personal Investing Plan https://mystockmarketbasics.com/quick-start-plan ⏩ Easy, Step-by-Step to Analyzing Stocks! 5-Minute Guide to Picking the Best Stocks! https://mystockmarketbasics.com/quick-start-stocks 🤑 Get The Weekly Bow-Tie - my FREE weekly email newsletter sharing market updates, trends and the most important news! Market Updates for the Smart Investor! https://mystockmarketbasics.com/dailybowtie My Investing Recommendations 📈 📊 Download this Portfolio Tracker and Investing Spreadsheet! [Community Discount Code] https://mystockmarketbasics.com/spreadsheetdiscount ✅ FREE Report! See the top five stocks in my portfolio, the five stocks I'm buying for the next 30 years! https://mystockmarketbasics.com/motleyfool 🤑 Join me on the Blossom app and see all the stocks in my portfolio! https://mystockmarketbasics.com/blossomsocial ✅ See why I transferred all my non-stock real estate investments to Arrived. Dividends up to 8% and double-digit returns on rental properties. Get started today! https://mystockmarketbasics.com/InvestArrived Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through dividend stocks, investing and ways to make more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.

• published: 04 Mar 2024
• views: 15191