TIVP005: Alphabet (GOOGL): Searching for Quality w/ Shawn O’Malley

The Intrinsic Value Podcast - The Investor’s Podcast Network

The Investor's Podcast Network

Investing, Education, Business

4.6 • 593 Ratings

🗓️ 2 February 2025

⏱️ 72 minutes

🔗️ Recording | iTunes | RSS

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Summary

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down Alphabet — the parent company of Google, which is one of the most valuable companies in the world and probably an important part of your everyday life. Shawn explores how Google got its start, how Alphabet makes money from seemingly-free services like Gmail, Google Maps, and Google Earth, and what to make of how AI and regulatory threats could reshape Alphabet’s business model. Shawn paints a high-level picture of the most important things to understand about this incredible business and then goes through his process for valuing each individual business unit at Alphabet. You’ll learn how Alphabet’s different business units are structured, how they make money, and how Shawn assembles a “sum-of-the-parts valuation” for the company, plus so much more! Prefer to watch? Click here to watch this episode on YouTube. IN THIS EPISODE, YOU’LL LEARN 00:00 - Intro 05:39 - Which subsidiaries make up the Alphabet conglomerate 07:58 - What to make of Alphabet’s “Moonshot Bets” division 10:33 - How to factor in Waymo and other speculative technologies into the company’s valuation 23:58 - How AI is changing search 29:22 - In what ways Alphabet earns different forms of advertising revenue 31:33 - Why YouTube is arguably the most valuable streaming platform in the world 39:37 - Why regulatory concerns aren’t as much of a worry as you might think 45:42 - Mind-blowing stats about just how large and influential Alphabet is 48:16 - How to put together a sum-of-the-parts valuation for Alphabet *Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences. BOOKS AND RESOURCES Get smarter about valuing businesses in just a few minutes each week through our newsletter, The Intrinsic Value Newsletter. Aswath Damodaran on the Magnificent 7. Check out Alphabet pitch on the Value Investors Club. Adam Seessel's book, Where the Money Is: Value Investing in the Digital Age. Adam Seessel’s past appearances on the Millennial Investing podcast in: November 2023, September 2022, and June 2022. Adam Seessel on the We Study Billionaires podcast. Learn more about Alphabet’s Moonshot Bets. Attend the 2025 Berkshire Hathaway shareholder meeting and meet-ups with The Investors Podcast Network Check out the books mentioned in the podcast here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Browse through all our episodes (complete with transcripts) here. Try Shawn's favorite tool for picking stock winners and managing our portfolios: TIP Finance. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: TurboTax Public Airbnb Connect with Shawn: Twitter | LinkedIn | Email HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:02.7	On this week's episode of the Intrinsic Value podcast, I'm reviewing a member of the so-called
0:07.5	Magnificent Seven for the first time.
0:10.3	Over the last four episodes, I've dug through a pretty diverse mix of businesses, including
0:15.0	Madison Square Garden Sports, Kupang, Ulta, and John Deere, and yet, I've refrained from covering
0:20.2	any of the most popular
0:21.3	stocks in markets like Tesla, Nvidia, Apple, Amazon, or Meta.
0:26.2	In part, I tend to think that these companies are either so well-tracked or so big that,
0:31.4	despite being excellent businesses, there are better opportunities out there for starting
0:35.7	a new position in than one of these mega cap stocks.
0:38.9	But I'm going to go against that sentiment today to explore Alphabet, the behemoth parent company
0:43.9	of Google. Alphabet is interesting to me because on a surface level, I feel as though I understand
0:50.0	what they do better than some of the other big tech names, and because Alphabet has lagged
0:54.6	a bit behind its Mag 7 peers in the last two years, over concerns about disruptions
0:59.8	to its search monopoly from large language models like ChatGBT, GBT, as well as looming
1:04.8	threats of antitrust enforcement against the company by the government. Alphabet is about
1:09.6	so much more than search, though.
1:11.6	YouTube is effectively the largest video streaming service and podcast platform in the world,
1:16.6	and one of the largest for music streaming too.
1:18.6	And don't forget about its Android devices either, Chrome Browser or Self-Driving Vehicle Division,
1:23.6	Waymo, which is partnering with Uber to change how we travel around cities.
1:28.4	Alphabet is a conglomeration of several of the best businesses in the world, with data on
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