By skyforbes 
You basically can’t go 20 seconds without hearing someone mention the tech / AI bubble these days. It’s completely unavoidable and is shaping how people invest more than you may realize. But here’s why I think this narrative is actually creating a generational buying opportunity for a few companies.
People are conflating the AI bubble and the massive growth of the Mag 6. But fail to acknowledge that, barring Nvidia, the Mag 6 growth is almost 100% due to non-LLM based bottom line growth. These monopolies are putting up Jokic numbers that justify these valuations.
This brings us to Google, one of the most oversold stocks in the entire market (until very recently). After reporting a record breaking 100M revenue quarter, and beating EPS expectations by over 30%, GOOG stayed completely flat. Touted as part of the “frothy and way overbought” Mag 7, GOOG’s PE ratio of 27.91 is LOWER THAN SPY’s PE of 28.89.
Let me repeat that for you:
One of the three companies that can manufacture cutting edge AI chips at scale, the HIGHEST NET PROFIT COMPANY ON THE PLANET, that grew every part of its business double digits YoY, has a lower PE ratio than:
-Walmart
-Caterpillar
-Costco
-Nike
-Hilton
-Pepsi
Talk about overvaluation. I’d argue the rest of SPY is more bubbly, as they are being bought via Index funds en masse due to MAG 7 gains, but aren’t being shorted like the MAG 7 are because that doesn’t fit the narrative.
The way I see it, even if we are in a bubble, google does not depend on AI contracts dated 1-4 years out in the way that other players in the space do, as they consume the lions share of their own compute with their money printing businesses.
And if we aren’t in a bubble, and those who control AI control the world, then google is probably the best positioned company out there. They have the strongest AI talent, have several already vetted AI business (Isomorphic labs, Waymo, Search, Shorts), own the entire AI stack: applications, models, chips, data centers (they have 10+ yoe building massive TPU data-centers on time).
The absurd undervaluation compared to its peers (AMZN, MSFT, AAPL, NVDA) won’t last forever. Given google is the most profitable business in the world, either the rest of the Mag 6 need to show growth rates significantly higher than google’s absurd pace to justify the 30-40% premium, or GOOG will need to show signs of slowing down. But that’s not what we’re seeing today, and I’m tired of pretending that GOOGL is at all “overvalued” due to the AI bubble. it’s arguably the other way around.
TLDR: I’M NOT SELLING