Google At Staggering 42% Discount To S&P 500 - Alphabet (NASDAQ:GOOGL)

Google At Staggering 42% Discount To S&P 500 After $150 Billion Value Dive

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Google’s $150B stock plunge tied to Apple testimony may be overblown, says JPMorgan’s Anmuth.
At 16x forward P/E, GOOGL looks like a bargain ahead of Google I/O and further AI updates.
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Alphabet Inc GOOGL GOOG just clocked one of its worst trading days since 2023, shedding over 7% and nearly $150 billion in market cap.

Apple Exec’s Testimony Sends Google Stock Plummeting

What caused the market to pull the plug? A courtroom mic-drop from Apple Inc's AAPL Eddy Cue, senior VP of Internet software and services.

Cue's testimony at the Google Commercial Search antitrust trial sent shockwaves through the tech world. He revealed that Apple saw its first drop in search volume in two decades this April – and pointed the finger squarely at AI rivals like ChatGPT and Perplexity.

More alarming, Apple has been chatting with both about becoming potential Safari search partners. That's like inviting your ex's nemesis to the prom.

Google Stock Sell-Off Overdone, Says Analyst

Investors didn't take it lightly. Google's dominance in search suddenly looked a bit shakier, especially with paid click growth crawling at just 2% in Q1 – down from mid-single digits last year. But JPMorgan analyst Doug Anmuth thinks the sell-off was a bit much. In his words: "Overdone."

Anmuth emphasized that Google is still the default on Safari and continues to see "overall query growth…including coming from Apple devices." He also notes that Apple’s $20 billion revenue share from Google is too big to walk away from.

While bears highlight a slowing growth story, bulls point to Google’s fundamentals. YouTube‘s ad revenue climbed 14% in the fourth quarter of 2024 and Google Services’ operating margin jumped to a strong 39%. Not to mention, AI Overviews now reaches 1.5 billion users monthly—a stat worth bragging about as the I/O event looms on May 20.

With Google stock trading at just 16.1x forward earnings, according to data from Benzinga Pro – 42% below the S&P 500's 27.65x – and Wall Street’s top analysts pegging a 44.6% upside, there's a case to be made that this panic is more courtroom drama than structural decline.

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