Time to Search for a Google Replacement?

Google’s parent, Alphabet, is delivering strong results—yet shares are down almost 19% year-to-date.

Last quarter, Alphabet reported:

• 12% year-over-year revenue growth,
• Earnings per share that beat expectations by a wide margin,
• Expanded operating margins, and
• A $70 billion share buyback program—enough to retire 3–4% of outstanding shares

Despite these strong fundamentals, the stock trades at just 16x earnings, a meaningful discount both to the broader market and to Alphabet’s own historical average.

So, why the disconnect?

For years, digital giants like Google and Facebook have steadily pulled ad budgets away from traditional media (newspapers, radio, and magazines). But the next wave of disruption could come from the chatbots.

Personally, I find myself relying more and more on tools like ChatGPT and Perplexity each day. It’s like working with ten additional colleagues without having to be polite (though I’ve caught myself saying “Thanks for your help, have a great day” more than I’d like to admit).

These platforms currently feature little to no advertising—but that may change, potentially diverting user attention and ad dollars away from Google.

Alphabet is also in the crosshairs of regulators. The U.S. Department of Justice is pursuing antitrust action that could force divestitures—including potentially Google Chrome, which channels roughly 30% of all search traffic.

A breakup of this scale is no small task (see: Breaking Up Is Hard to Do), but even the threat can be a major distraction. Just ask Bill Gates, who said: “There’s no doubt the antitrust lawsuit was bad for Microsoft, and we would have been more focused on creating the phone operating system, and so instead of using Android today, you would be using Windows Mobile if it hadn’t been for the antitrust case” 

Despite these risks, there’s still plenty to like about Alphabet.

• YouTube remains a juggernaut in digital media, drawing in billions of users and commanding strong advertiser demand. More creators—including us—are leaning into this platform.
• Waymo, Alphabet’s autonomous vehicle unit, is scaling up robotaxi operations across U.S. cities, signaling tangible momentum in self-driving tech.
• AI investment is massive. Alphabet plans to invest $75 billion in capital expenditures this year and much of it will be directed toward AI and cloud infrastructure. Google’s AI Overviews already reach 1.5 billion monthly users.

Alphabet isn’t without its challenges. The digital ad landscape may shift and antitrust distractions are real. But this is still a company executing well on the fundamentals and investing billions of dollars towards the future. The stock may be under pressure—but the business is anything but in decline.

-written by Jeff Pollock