So here’s the thing about picking stocks from the Magnificent Seven – it’s like choosing your favorite Avenger. Everyone’s got an opinion, and they’re all probably wrong except yours, right?
Well, Gene Munster from Deepwater Asset Management just threw his hat in the ring, and his pick might surprise you. Forget about the usual suspects hogging all the AI spotlight – this guy thinks Alphabet is about to have its main character moment.
Now, before you roll your eyes and mutter “Google? Really?”, hear me out. The search giant has been playing the long game while everyone else was busy having ChatGPT fever dreams.
The Plot Twist Nobody Saw Coming
Remember when everyone was like “Oh no, Google’s getting disrupted by ChatGPT!” and “RIP Google Search”? Yeah, well, plot twist: Google just casually announced that Meta might start using their Tensor Processing Units (TPUs) for data centers by 2027. That’s like your ex asking to borrow your car because theirs broke down – awkward for them, validating for you.
While Nvidia stock took a little tumble on this news, Alphabet stock did a happy dance. And honestly? It makes sense. Google’s been building these AI chips while everyone thought they were just, you know, googling stuff.
The Numbers Game (Don’t Worry, I’ll Keep It Simple)
Here’s where it gets interesting. Munster points out that Google has something most AI companies would kill for: 2.5 billion daily users. Compare that to ChatGPT’s estimated 500 million daily users, and suddenly Google’s distribution advantage looks less like a nice-to-have and more like a superpower.
“It’s just habitual,” Munster says, and he’s not wrong. When’s the last time you consciously decided to Google something? Exactly. It’s muscle memory at this point.
The Gemini Glow-Up
Speaking of Google’s AI game, their Gemini tool is finally getting some respect. Even Salesforce CEO Marc Benioff – who’s not exactly known for handing out participation trophies – recently said Gemini is better than ChatGPT. That’s like Gordon Ramsay complimenting your cooking; it doesn’t happen often, but when it does, you know you’ve made it.
The kicker? Only about 20% of Google’s user base is regularly using Gemini. That’s not a problem – that’s an opportunity the size of Texas.
The Valuation Reality Check
Google’s trading at 28 times forward earnings, which is pretty much in line with the rest of the Mag 7 crew. But here’s Munster’s thesis: if Google can prove it’s not just a search company but also a legit AI and chip player, that multiple could look pretty reasonable in hindsight.
Look, I’m not saying you should YOLO your entire portfolio into Alphabet stock because one fund manager thinks it’s neat. But when someone with Munster’s track record says a company has “reignited its culture to compete,” it might be worth paying attention.
After all, in the world of tech investing, sometimes the best bet isn’t the flashiest new thing – it’s the old reliable that just figured out how to be cool again.