Allegedly value investors Google Parents Alphabet Inc At a staggering $2.3 trillion, recognizing its dominance in internet search and its leading role in artificial intelligence. However, according to a Bloomberg report, Needham & Co. Analysts say it still fails to capture the true value of large-scale data. Youtubea subsidiary of Alphabet.
In a recent note, Laura Martin and Dan Medina from Needham estimate that YouTube’s standalone value is at least $455 billion, which is overstated. NetflixMore than half the market cap of He says Alphabet’s current structure doesn’t adequately reflect the value of its diversified business, particularly YouTube. They recommend Alphabet stock as a buy and have set a price target of $210, a 10% increase from the July 5 record close.

YouTube can help Google protect its search business from AI threats.

“YouTube has hidden value that cannot be traded separately,” Martin explained in a separate interview, Bloomberg reported. “It’s stuck within Google, a group that faces different threats,” he added, citing concerns about AI potentially disrupting search, a threat “unrelated to YouTube. ” Needham believes that separating YouTube would benefit investors interested in either its streaming dominance or Alphabet’s role in AI. According to their analysis, even making just 5% of YouTube tradable could increase Alphabet’s stock price by $15 per share.
Martin argues that conglomerates often struggle to attract investors because some are interested in specific parts but not the entire company.
Alphabet’s complex structure has been criticized for obscuring the value of its individual businesses. The regulatory risks of breaking up the company have actually been welcomed by many investors. However, Quincy Krosby, chief global strategist at LPL Financial, suggests there is little indication that Alphabet or other tech giants are considering such a separation anytime soon.
Meanwhile, YouTube’s streaming dominance continues to grow as consumers move away from traditional cable and broadcast TV. Advertising revenue for the platform is projected to reach $37 billion in 2024 and $42 billion in 2025, reflecting growth of around 17% and 14%, respectively.
While AI has been a major driver of Alphabet’s recent stock gains, YouTube’s role in the “subscriptions, platforms and devices” segment is a key growth engine and growing contributor to overall revenue, according to Goldman Sachs analysts. What is outstanding? He reiterated his buy rating on Alphabet and raised his price target to $211, citing his revised, optimistic assumptions about YouTube’s ad revenue growth.
There are additional reasons why Alphabet is catching on to YouTube. Divyaunsh Divatia, an analyst at Janus Henderson Investors, considers YouTube a “key pillar” of Alphabet’s AI strategy. He emphasizes YouTube’s benefits from being part of the Google Web Services ecosystem, while calling for more transparency from Alphabet to give investors a better idea of ​​YouTube’s growth drivers and value.
Beyond YouTube, Needham’s Martin believes other parts of Alphabet, such as its ad-tech unit, which is currently facing a lawsuit from the US Department of Justice, could potentially be spun off. It is important. In Martin’s view, “the alphabet is worth more in pieces than together.”

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