Google’s Investors’ Guard Dropped in Recent Months
* Bona fide business threats had emerged but were ignored as passive and relentless buying of Google’s shares masked a growing AI headwind
* Is Amazon as vulnerable as Google?
Google ($GOOGL) is not only an example that the threat to its search business is real…
Price Is Not Truth
… But it is also testimony to the threat represented by market structure.
What do I mean by that? Let me explain…
Well, passive price momentum-based products and strategies carried Google’s shares ever higher in recent months — and the blind monkeys in the business media (without any or with limited analytical rigor), confidently took the price increases as a sign of fundamental progress. Indeed Google became the darling of the hyperscalers based principally on chart gazing.
Here is perennial bull Gene Munster voicing his concerns:
This gets me back to Amazon ($AMZN).
What has kept me from buying AMZN at seemingly an attractive price-earnings multiple is what has threatened Google. Is the utility of using Amazon markedly reduced as AI/Personal Bots expand their tasks?
Again from Gene Munster:
Finally, about two years ago we observed the dramatic change in the hyperscaler from capital light to capital intensive — suggesting that this was not market friendly and that it was price-earnings multiple altering/contracting:
Position: None
