Why This Legendary Value Manager Likes Alphabet and Citigroup Stock
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 29 2024
0mins
Should l Buy GOOGL?
Source: barron's
- Bill Nygren's Investment Approach: Nygren, a value investor, focuses on finding bargains and considers intangible assets in stock valuation.
- Shift in Portfolio Holdings: While previously holding growth stocks like Amazon and Adobe, Nygren now focuses on traditional value stocks with lower P/E ratios.
- Performance and Record: The Oakmark Fund managed by Nygren has outperformed peers based on various timeframes, with a 15-year annual return of about 15%.
- Market Perspective: Nygren believes that new market highs are not necessarily cautionary signals and advocates for holding portfolios during such times.
- Current Holdings and Strategy: Nygren's fund includes companies like Citigroup, APA, and General Motors, which are undergoing transformations and returning capital to shareholders.
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Analyst Views on GOOGL
Wall Street analysts forecast GOOGL stock price to rise
33 Analyst Rating
26 Buy
7 Hold
0 Sell
Strong Buy
Current: 337.120
Low
305.00
Averages
374.25
High
400.00
Current: 337.120
Low
305.00
Averages
374.25
High
400.00
About GOOGL
Alphabet Inc. is a holding company. The Company's segments include Google Services, Google Cloud, and Other Bets. The Google Services segment includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. The Google Cloud segment includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Its Other Bets segment is engaged in the sale of healthcare-related services and Internet services. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Google Cloud Platform provides access to solutions such as artificial intelligence (AI) offerings, including its AI infrastructure, Vertex AI platform, and Gemini for Google Cloud; cybersecurity, and data and analytics. Google Workspace includes cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Apple's Growth Slowdown: With the third-highest P/E ratio, Apple recently reported its best quarter in years, yet its slowing innovation and lack of engagement in the AI race have disappointed investors regarding its future prospects.
- Amazon's Cloud Business Potential: Amazon's P/E ratio stands at 32, which is high, but the market is underestimating the growth potential of its AWS business, particularly in the custom AI chip sector, which is expected to drive significant growth in the coming years.
- Microsoft's Investment Opportunity: Microsoft leads the Magnificent Seven with a P/E ratio of 24.6, and while it isn't the cheapest option, its current stock price is at a decade low, presenting a rare opportunity for investors to capitalize on this valuation.
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- Tesla's Investment Outlook: Although Tesla ranks at the bottom of the investment list, its stock price being down about 20% does not indicate a sell; rather, it may be a good time to wait for the next significant drop to capitalize on potential cash flow growth from its robotaxi and humanoid robot projects over the next decade.
- Apple's Valuation Concerns: Apple's valuation is troubling, as it is the slowest-growing stock among the seven, and despite its best quarterly performance in years, it seems passive in the AI race, leading to investor disappointment regarding its future prospects.
- Amazon's Cloud Business Potential: Amazon's valuation stands at 32 times forward earnings, which is high, but the massive upside of its AWS business is not fully priced in, with strong growth expected in the coming years, particularly in its custom AI chip division.
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- Apple's Growth Slowdown: With the third-highest P/E ratio, Apple recently reported its best quarter in years, yet its slowing innovation and lack of engagement in the AI race have disappointed investors regarding its future prospects.
- Amazon's Cloud Business Potential: Amazon's P/E ratio stands at 32, which is high, but the market is underestimating the growth potential of its AWS business, particularly in the custom AI chip sector, which is expected to drive significant growth in the coming years.
- Microsoft's Investment Opportunity: Microsoft leads the Magnificent Seven with a P/E ratio of 24.6, and while it isn't the cheapest option, its current stock price is at a decade low, presenting a rare opportunity for investors to capitalize on this valuation.
See More
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- Tesla's Investment Outlook: Although Tesla ranks at the bottom of the investment list, its stock price being down about 20% does not indicate a sell; rather, it may be a good time to wait for the next significant drop to capitalize on potential cash flow growth from its robotaxi and humanoid robot projects over the next decade.
- Apple's Valuation Concerns: Apple's valuation is troubling, as it is the slowest-growing stock among the seven, and despite its best quarterly performance in years, it seems passive in the AI race, leading to investor disappointment regarding its future prospects.
- Amazon's Cloud Business Potential: Amazon's valuation stands at 32 times forward earnings, which is high, but the massive upside of its AWS business is not fully priced in, with strong growth expected in the coming years, particularly in its custom AI chip division.
- Microsoft's Undervalued Opportunity: Microsoft trades at a forward P/E of 24.6, not the lowest, but its current stock price is among the lowest in the past decade, presenting a rare opportunity for investors to take advantage of before prices rise again.
See More
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Market Reaction: NISOURCE shares increased by 3.5% in pre-market trading following recent developments.
Long-Term Power Deal: The company signed a long-term power agreement with AlphaBet, indicating a strategic move to enhance its energy portfolio.
Expansion of Amazon Agreement: NISOURCE is expanding its existing agreement with Amazon, which may lead to further growth opportunities.
Implications for Future Growth: These agreements suggest a focus on sustainable energy solutions and potential revenue growth for NISOURCE.
See More
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- Market Share Advantage: According to PwC analysts, Nvidia holds over 90% of the GPU market share in AI-accelerated data centers, attracting numerous businesses due to its superior computing capabilities, thereby solidifying its market leadership.
- Competitor Analysis: While companies like AMD, Broadcom, and Alphabet pose competition in the GPU market, Nvidia's biggest threat comes from its own customers, such as Meta, Microsoft, and Amazon, who are developing their own AI solutions that could undermine Nvidia's pricing power.
- Internal Development Threat: These large customers' internally developed GPUs are significantly cheaper than Nvidia's hardware and typically do not face delivery delays due to overwhelming demand, which could pressure Nvidia's gross margins, especially as AI GPU scarcity diminishes.
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See More
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- Massive Market Potential: According to PwC analysts, the global AI market is projected to exceed $15 trillion by 2030, with Nvidia leading the charge as a GPU titan, highlighting its critical role in technological advancement.
- Intensifying Competition: While companies like AMD, Broadcom, and Alphabet pose significant competition in the GPU and AI chip sectors, the greatest threat to Nvidia comes from its own customers, who are developing their own AI solutions that could undermine Nvidia's market share.
- Internal Threats Emerge: Major clients such as Meta, Microsoft, and Amazon are creating proprietary GPUs; although these products cannot match Nvidia's high-end offerings, their lower costs and lack of backlog could chip away at Nvidia's pricing power and gross margins.
- Uncertain Future Outlook: As internal development of AI chips increases, Nvidia's pricing power and mid-70% gross margins may come under pressure, and while its market leadership remains intact for now, the future landscape warrants close monitoring.
See More
OVHCLOUD - SIX-YEAR CONTRACT AGREEMENT
- Contract Duration: The cloud contract spans a period of six years.
- Service Provider: The details regarding the specific cloud service provider involved in the contract are not mentioned.
- Purpose of Contract: The contract is likely aimed at enhancing cloud services for the organization.
- Implications: This long-term commitment may indicate a strategic move towards digital transformation and reliance on cloud technology.
See More
