Bill Ackman and Philippe Laffont have opposing views on Alphabet stock. Billionaire hedge fund manager Bill Ackman's apach to portfolio management is rather simple.
The founder and CEO of Pershing Square Capital Management keeps its portfolio concentrated in a small number of large-cap stocks that he buys when they are arguably trading below their intrinsic values.
Coatue Management founder Philippe Laffont has a different philosophy. Coatue's portfolio boasts a number of high-growth stocks that appear poised to dominate emerging trends.
One company that Ackman and Laffont seem to have different views on is "Magnificent Seven" member Alphabet (GOOGL 0. 49%) (GOOG 0.
Let's start by exploring what drives Ackman's conviction in the megacap artificial intelligence (AI) stock. From there, I'll detail a major risk factor that Laffont recently called out for the stock.
Lastly, I'll vide my own breakdown of Alphabet and whether or not the stock could be worth a look right now. Why does Bill Ackman Alphabet.
Pershing Square's position in Google parent Alphabet makes up 14% of the value of its portfolio, based on the fund's most recent 13F filing.
In its annual investor presentation, the firm identified Alphabet as an "underappreciated" opportunity in the AI landscape.
It went on to highlight new opportunities in digital advertising and cloud computing as catalysts for Alphabet that could drive accelerated revenue growth and fit margin expansion.
For example, Google's responses now highlight AI-crafted summaries. So far, this feature has shown some encouraging metrics such as higher user engagement trends among those who use the summaries.
This puts Google in an advantageous position when it comes to enticing advertisers to its platform.
In addition, Alphabet's cloud computing has made meaningful investments in cybersecurity tools over the last few years.
The integration of AI-powered cybersecurity services into the Google Cloud Platform (GCP) is a major differentiator from peers such as Microsoft Azure and Amazon Web Services (AWS).
Moreover, it also opens the door to another enormous addressable market and vides Alphabet with more direct ways to compete with the s of CrowdStrike and other leading cybersecurity players.
GOOGL Net Income (TTM) data by YCharts. Over the past year, Alphabet generated more net income than its closest cloud infrastructure peers.
Yet it's trading at a forward-price-to-earnings (P/E) multiple of just 18. 4 -- roughly half the ratios of Amazon and Microsoft.
Given Alphabet's discounted valuation and the potential value to be gained from integrating AI and cybersecurity across its vast ecosystem, I can see why the company earned a position in Pershing Square's portfolio.
Laffont just called out a major risk factor for Alphabet investors During a recent panel discussion on CNBC's Squawk Box, Laffont detailed his thoughts on Alphabet.
The billionaire was bullish on some of its es, such as platform YouTube and autonomous driving company Waymo. However, Laffont expressed concern over the outlook for Google.
He believes that the rise of OpenAI could pose a threat to Google's. Image Source: Getty Images. Is Alphabet stock a buy right now.
I completely understand Laffont's stance, and I would go as far as to say that his opinion is rooted in reality.
Some trends have already been indicating that Google is losing some of its momentum, ly due to the rise of OpenAI and competing large language models (LLMs).
With that said, I'd to call out an interesting development between Alphabet and OpenAI.
The two companies recently formed a strategic partnership under which OpenAI will leverage Google Cloud's network.
As Ackman's thesis shows, Alphabet has some creative ways to grow its budding cloud infrastructure relative to the competition.
Considering OpenAI's closest ally throughout the AI revolution has been Microsoft, I see the expansion of its relationship with Google Cloud as an incredibly savvy deal and potentially lucrative opportunity for Alphabet.
Furthermore, if OpenAI does begin to meaningfully take from Google, then Alphabet appears to have identified a new way to offset that headwind while monetizing the very company that potentially threatens it.
Although I understand Laffont's view, I think the bearish sentiment surrounding Alphabet is more academic than reality.
Moreover, I think the potential downside is baked into Alphabet's stock at this point, considering the steep discount and wide disparity in valuation multiples it trades at relative to its near peers (despite being the most fitable of the three).
I see Alphabet stock as a dirt-cheap, no-brainer opportunity right now. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, and Microsoft.
The Motley Fool has positions in and recommends Alphabet, Amazon, CrowdStrike, and Microsoft.
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