Gary Black, managing partner at Future Fund LLC, has highlighted what he sees as an attractive valuation for Alphabet Inc. GOOG GOOGL, despite the company facing increased scrutiny from the U.S. Department of Justice.
What Happened: In a recent post on X (formerly Twitter), Black noted Google’s modest price-to-earnings (P/E) ratio for 2024, emphasizing its growth potential. However, he also pointed out a looming threat from emerging AI-powered competitors.
The Justice Department recently filed a 32-page court document outlining potential remedies to address Google’s dominance in the search market.
Despite the legal challenges, Black remains bullish on Google’s financial outlook. He wrote, “$GOOG remains relatively inexpensive among growth stocks at a 2024 P/E of 20.7x and 2025 P/E of 18.3x and +15% projected earnings growth between 2024-2029.”
Why It Matters: The agency is considering asking a federal judge to order the breakup of certain parts of Google’s business, which could have far-reaching implications for the tech giant. This action comes as AI-driven competitors, such as OpenAI‘s ChatGPT and Microsoft‘s Copilot, gain ground in the search space.
The DOJ’s document proposes “behavioral and structural remedies” aimed at preventing Google from leveraging its suite of products, such as Chrome, Play Store, and Android, to favor its search business and related products. It also includes provisions targeting Google’s use of artificial intelligence in search, underscoring the growing significance of AI in the industry.
Among the remedies, the DOJ suggested that Google could be forced to provide access to the data it uses to build its search results and AI models. The judge overseeing the case, Amit Mehta, is expected to rule on the remedies by August 2025, after a two-week remedies hearing in April 2025.
However, Black warned of the potential threat posed by AI-based language models like ChatGPT and Copilot. “The biggest risk is that ChatGPT, Copilot, and other AI language models continue to take search share from GOOG, even though there’s been little loss in search revenue share to date,” Black noted.
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