Alphabet Emerging As The Winner In The AI Race, But Is Overvalued (Rating Downgrade)
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Gravenhurst Capital461 FollowersFollow5ShareSavePlay(8min)Comments(2)SummaryThe updated DCF price target is $258, significantly below the current market price of $310. The recommendation is now to Hold existing shares and wait for a pullback.Sales accelerated in both Google Services and Cloud, driven by the successful integration and commercialization of the new Gemini AI model.Growth requires a substantial increase in CapEx (revised to $91B-$93B in 2025), which negatively impacts near-term Free Cash Flow (FCF). Supatman/iStock via Getty Images In our latest SA article published in August for Alphabet Inc. (GOOG)(GOOGL)(GOOG:CA), we recommended buy when the stock was trading at $200. The stock is now trading at $310, representing a total returnThis article was written byGravenhurst Capital461 FollowersFollowWe write about companies trading at attractive valuations with strong durable competitive advantages. Investment Principles- Invest in companies with consistent earning power and durable competitive advantages.- Invest in companies where we can get a sufficient margin of safety.- We prefer companies that generate substantial cash-flow and consistently earn above-average return on capital.- We prefer companies with conservative leverage. - Always hold an appropriate level of cash in order to be able to capitalize on market volatility.Analyst’s Disclosure:I/we have a beneficial long position in the shares of GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.