Why it’s time to ditch good old GOOG – TradingView News

“That’s what the money is for!” The highlight from the series “Mad Men” explains why I just sold my shares in Alphabet GOOG. If you own Alphabet stock, consider following suit.

Technology is a business full of ideas implemented by talented, enthusiastic and competent people. It’s not like manufacturing. Google’s I/O developer conference has become an innovation-free nap. Wall Street doesn’t understand this. It ruined Google, just as it ruined Yahoo 20 years ago, by destroying the idealism of its employees.

The disadvantages of Alphabet shares

Under CEO Sundar Pichai, he works with the former Morgan Stanley MS Banker Ruth Porat has destroyed Google’s “other bets”. It allowed its core search business to weaken. It has fallen behind in artificial intelligence.

Instead, the company relied on payments to keep its search business running. It has focused on selling cloud the way Walmart does WMT sells food at price.

The question of search payments is at the heart of a trial that is now reaching its climax in Washington. Few seem to expect Google to lose. Those who believe that appeals and political donations can influence the outcome.

It is an incredibly cynical attitude.

Google has been losing talent because it requires employees to return to the office, which can amount to a 20% pay cut. Laying off hundreds of employees and moving that work to India and Mexico is evidence of a serious problem.

As employees leave, Pichai becomes a billionaire. I have no doubt he earned his money. But disrespecting that status while firing people isn’t good for morale.

While engineers are being kicked out, Google Cloud is hiring salespeople. Google Cloud is growing, but it’s not gaining much market share. Despite all the incentives and sales presentations, it’s still only 11%. Cloud should sell.

Leader in exile

Larry Page and Sergey Brin, neither of whom work there, control the votes of Alphabet’s shares. Page invests in start-ups. Brin personally intervened to prevent an AI expert from giving up.

But behind Brin’s minimal involvement in the business lies a false assumption. It’s that a small number of super geniuses can drive Google’s AI.

This goes against the entire history of the computer industry. Computer science is a team sport. Open source wins over time because it can bring more attention to the code.

Here too, Google hopes that regulation can hinder competitors from entering the market. But that ship sailed a long time ago. Denying Open Source a place in AI development is denying a place to Meta Platforms METAwhich bases its contribution on the open source concept.

Even though Google is worth $2.1 trillion today, there’s a reason its price-to-earnings ratio is 25, versus Microsoft’s 36 MSFT. Even Meta is ahead at 27, despite Google’s new dividend.

The conclusion

This century, Google has evolved from a scrappy opportunist to a co-monopolist in advertising and cloud, and Alphabet stock has benefited.

It’s good to be the king, but the crown is a heavy weight. You are constantly faced with competitive threats. The government also becomes the main competitor.

The biggest risk to Google’s status today is the antitrust case. Too many people neglect the risk. But I have personally seen what Microsoft’s consent decree has done to this company.

Dozens of lawyers and consultants were brought in whose job it was to say “no” to innovation. Google’s supporters like to bring this up in defense of their customer.

For Google, the advertising business is Microsoft Windows. It is the profit center that lets the rest of the company sluggishly go its own way. What happens if it has to compete again, as is the case in AI?

I would rather own Microsoft. Even meta.

At the time of this writing, Dana Blankenhorn has had a LONG position at MSFT. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available from the Amazon Kindle Store. Tweet him at @danablankenhorn, connect with him on Mastodon, or subscribe to his Substack.

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