Becker Private Equity & Business Podcast: "Don’t Bet Against Google/Alphabet" Summary

Release Date: May 21, 2025
Host: Scott Becker

Introduction

In the May 21, 2025 episode of the Becker Private Equity & Business Podcast, host Scott Becker delves into the resilient performance and future prospects of Google/Alphabet, countering prevalent skepticism about the tech giant's longevity in an increasingly competitive landscape.

Alphabet’s Performance Overview

Scott begins by addressing Alphabet's current market standing, highlighting its status as the parent company with Google serving as its primary revenue generator. He notes, “Google is the cash cow at Alphabet, really 98% of the company? Maybe not that much, but pretty much so” (00:15), emphasizing Google's significant contribution to Alphabet's overall financial health.

Despite recent fluctuations, Scott points out that Google's stock saw a modest increase of 5% on the day, contrasting with a 9% decline year-to-date. He remarks, “It's down about 9% year to date, but that's better than a lot of the NASDAQ big seven stocks” (00:25), suggesting that Google's relative stability is a positive indicator amidst broader market volatility.

The Role of Google as the Cash Cow

Scott elaborates on Google's dominance within Alphabet, describing it as the "cash cow" that sustains the conglomerate's operations. He acknowledges that while Google's dominance is substantial, it's not absolute, hinting at potential areas for Alphabet's growth beyond Google’s core functions.

AI Integration and Its Impact on Google’s Search

A significant portion of the discussion centers on Google's advancements in Artificial Intelligence (AI), particularly in enhancing search capabilities. Scott is impressed by Google's AI-powered search and analysis tools, stating, “It's amazing about Google, you would think with all this AI powered search and AI powered analysis that when you plug something in today, you don't have to go through 30 different Google entries to find what you want” (00:40).

He draws parallels to his own professional experience, comparing Google's summarization feature to crafting concise memos for clients, underscoring the efficiency and user-centric design of Google's AI advancements.

Industry Opinions on Google’s Future with AI

Addressing the skepticism surrounding Google's future in the AI era, Scott references a conversation with an AI sector expert. He conveys the expert's perspective: “Google had gotten so far ahead of investing in deep tech and artificial intelligence and how they work that they think, quite frankly, Google is going to be able to turn a lot of this into advantage versus a disadvantage” (01:20).

This insight counters the widespread narrative on platforms like Twitter, where some claim, “the days of Google are done, that it's over” (01:10). Scott highlights the dichotomy between the pessimistic views prevalent on social media and the more optimistic assessments from industry insiders who recognize Google's strategic investments in AI as a buffer against declining relevance.

Scott’s Personal Insights and Predictions

Scott reflects on his own stance, admitting uncertainty yet leaning towards confidence in Google's enduring success. He observes, “I don't know what the real answer will end up being, but as I watch Google, it again becomes one of those companies. I think it's hard to bet against coming out on top or doing well” (01:55).

He underscores Google's ability to adapt and innovate, making it a formidable player that investors shouldn't underestimate. This balanced view encapsulates the complex interplay between market perceptions and the company's internal strengths.

Conclusion

In wrapping up, Scott invites listeners to engage with his analysis by sharing their predictions on Google's trajectory over the next five to ten years. He incentivizes participation by offering a $100 Amazon gift certificate for the first opinion submitted, emphasizing the value he places on diverse perspectives regarding Google's future.

Notable Quotes:

• “Google is the cash cow at Alphabet, really 98% of the company? Maybe not that much, but pretty much so” – Scott Becker (00:15)
• “It's down about 9% year to date, but that's better than a lot of the NASDAQ big seven stocks” – Scott Becker (00:25)
• “It's amazing about Google... you don't have to go through 30 different Google entries to find what you want” – Scott Becker (00:40)
• “Google had gotten so far ahead of investing in deep tech and artificial intelligence...” – Scott Becker recounting an expert’s view (01:20)
• “I think it's hard to bet against coming out on top or doing well” – Scott Becker (01:55)

For further insights and discussions on private equity and business, tune into more episodes of the Becker Private Equity & Business Podcast.