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Buy Signal for Alphabet/ Google

August 31, 2023

One of the world’s most important stocks is giving a buy signal on a long-term chart. Short term anything can happen but as the months pass this stock should go much higher.

Its armlock on search, video and online advertising makes the company a warrant on global growth,

“There’s exciting momentum across our products and the company, which drove strong results this quarter. Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services. With fifteen products that each serve half a billion people, and six that serve over two billion each, we have so many opportunities to deliver on our mission.”

Sundar Pichai, CEO, Alphabet/ Google, Q2 2023, 25 July 2023

It sees obvious that Alphabet is going to be a big player in all aspects of AI and Generative AI.

We are in a period of incredible innovation for Search, which has continuously evolved over the years. This quarter saw our next major evolution with the launch of the Search Generative Experience, or SGE, which uses the power of generative AI to make Search even more natural and intuitive.

We have more than 20 years of experience serving ads relevant to users’ commercial queries, and SGE enhances our ability to do this even better. We are testing and evolving placements and formats and giving advertisers tools to take advantage of generative AI.

Third, we are making it easier for others to innovate using AI. One way is by providing Google Cloud’s high-performance infrastructure, optimized for a range of generative AI models. It’s being used by thousands of customers and partners to transform their businesses.

Our AI-optimized infrastructure is a leading platform for training and serving generative AI models. More than 70pc of gen AI unicorns are Google Cloud customers, including Cohere, Jasper, Typeface, and many more. We provide the widest choice of AI supercomputer options with Google TPUs and advanced NVIDIA GPUs, and recently launched new A3 AI supercomputers powered by NVIDIA’s H100. This enables customers like AppLovin to achieve nearly two times better price performance than industry alternatives.

Our new generative AI offerings are expanding our total addressable market and winning new customers. We are seeing strong demand for the more than 80 models, including third-party and popular open source in our Vertex, search, and conversational AI platforms, with the number of customers growing more than 15x from April to June. Among them, Priceline is improving trip-planning capabilities, Carrefour is creating full marketing campaigns in a matter of minutes, and Capgemini is building hundreds of use cases to streamline time-consuming business processes. Our new anti-money laundering AI helps banks like HSBC identify financial crime risk, and our new AI-powered Target and Lead Identification Suite is being applied at Cerevel to help enable drug discovery.

Sundar Pichai, CEO, Alphabet, Q2 2023, 25 July 2023

I could go on; the point is that Alphabet is heavily involved with AI and has the perfect platforms to apply it. It also has the money in a world where vast sums are being spent on turning data centres into super computers and creating a world familiar from the film 2001, A Space Odyssey, where a computer called HAL had all the answers to all the questions.

It is no accident that Alphabet shares are up almost 70 times since the IPO in 2004. This is a fantastic company whose products and services stand at the heart of the accelerating technology revolution.

The company is a cash machine.

Net income was $18.4bn. We delivered free cash flow of $21.8bn in the second quarter and $71bn for the trailing 12 months, reflecting improved operating income, as well as the deferral of certain tax payments to the fourth quarter of 2023 as noted in our earnings release. We ended the quarter with $118bn in cash and marketable securities.

Ruth Porat, CFO, Alphabet, Q2 2023, 25 July 2023

Strategy – Another MegaCap with a Great Future

My suspicion is that all the MegaCaps make great investments and also all the companies in the next division by size.

In 1855 there was a famous classification of French wines from the Medoc region around Bordeaux.

The historic 1855 Bordeaux Classification stands as the single most important and famous classification of any wine region in the world. Almost 160 years later, this historic document continues to stand the test of time, with almost no changes. In fact, since 1855, the official classification of Bordeaux wines from the Medoc has only allowed two modifications in almost 160 years!

Chateau Cantemerle was added in 1856, for the simple reason that it was left off by accident in 1855! The more important and historic change came when Chateau Mouton Rothschild was promoted from Second Growth to First Growth status. That took place on June 21, 1973. While some chateaux should be upgraded, and a few others downgraded, by and large, when you think about it, they came close to getting it right in the original 1855 Bordeaux classification.
Read more at:https://www.thewinecellarinsider.com/bordeaux-wine-producer-profiles/bordeaux/1855-bordeaux-classification/

The Wine Cellar Insider

The first growths are Lafite Rothschild, Margaux, Latour, Haut-Brion and Mouton Rothschild. Order a bottle of one of those in a Michelin starred restaurant and both your guests and your bank balance are going to be stunned.

After the first growths come 14 second growths some of which are so highly regarded they are almost first growths, wines like Montrose and Palmer.

It all becomes more complicated if wines from the right bank like Ausune, Petrus and Le Pin are included but what is significant is the incredible durability of the top names.

I suspect the investment world is becoming a little like that with megacaps like Alphabet having something in common with the first growth wines. This makes the shares interesting if they ever fall a little out of favour as Alphabet shares have until recently.

Share Recommendations

Alphabet. GOOGL Buy @ $135

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