Remember when everyone was freaking out that Google was getting schooled by ChatGPT? Yeah, well, plot twist: Google’s parent company Alphabet just became the teacher’s pet in the AI classroom, and one very smart investor thinks it’s the best stock to own among the tech giants.
Gene Munster from Deepwater Asset Management just dropped some serious knowledge about why Alphabet should be your top pick from the “Magnificent Seven” (that’s Wall Street speak for the seven tech stocks basically holding up the entire market like Atlas, but with better stock options).
Here’s the tea: Google’s been quietly building some serious AI muscle while everyone was obsessing over ChatGPT. Their Tensor Processing Units (TPUs) are apparently so good that even Meta wants to use them for their data centers by 2027. That’s like your rival asking to borrow your homework because theirs isn’t as good.
While Nvidia stock has been doing the financial equivalent of a face-plant, Google’s been climbing. Munster sees this as Google finally proving they can go toe-to-toe with OpenAI in the generative AI space. “This is showing that they, in fact, have the chops to compete,” he told CNBC, probably while doing a little victory dance.
But here’s where it gets really interesting: only about 20% of Google’s massive user base actually uses their Gemini AI tool regularly. That’s like having a Ferrari in your garage and only driving it to the grocery store once a week. The upside potential is enormous.
Even Salesforce CEO Marc Benioff recently said Google’s latest AI updates are better than ChatGPT. When a tech CEO publicly compliments a competitor, you know something big is happening. It’s like seeing two rival coffee shops recommend each other’s lattes.
The numbers game is pretty compelling too. Google’s trading at 28 times forward earnings, which is basically in line with its tech giant buddies. But Munster thinks Google deserves a higher valuation because they’re now competing in both the chip game AND the AI chatbot space.
Here’s the kicker: Google has 2.5 billion people using their search daily. ChatGPT? About 500 million daily users. That’s like comparing a packed stadium to a really good house party. Google’s distribution power is still unmatched, even in the age of AI disruption.
“If you think about Google’s distribution, it’s just habitual,” Munster noted. And he’s right – when was the last time you didn’t Google something? Exactly.
So while everyone’s been worried about Google getting left behind in the AI race, they’ve been quietly building the infrastructure to not just compete, but potentially dominate. Sometimes the tortoise really does beat the hare, especially when the tortoise has billions of users and some seriously impressive chips.
The moral of the story? Never count out the company that literally turned “google” into a verb. They might just surprise you.