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with Nasdaq Down 6% over the past 12 months, tech stocks still haven’t fully recovered from the 2022 bear market. That said, some companies are starting to grow as investor optimism returns. Let’s examine why the bull run has just begun Alphabet (GOOG 0.01%), (GOOGL 0.11%) And Global-E Online (GLBE 1.66%).
1. Alphabet
Up 18% year to date, Alphabet stock is recovering from its biggest crash on record. And while inflation and macroeconomic uncertainty have weighed on the digital advertising industry, investors shouldn’t underestimate the company’s potential to expand its revenue streams by taking advantage of new opportunities in artificial intelligence (AI).
So far, Google’s generative AI chatbot Bard has compared unfavorably to rivals such as ChatGPT. But investors should remember that this is only the first chapter in a story that may take decades.
Alphabet owns the world’s most popular websites, Google and YouTube. And that means it has a wealth of consumer data specifically related to search and browsing activity. As generative AI chatbots are trained on a body of real-world data, this is it. Economic village As competitors struggle to replicate.
Alphabet is targeting the infrastructure side of the AI opportunity with its new Tensor Processing Unit (TPU) chip, which it claims is 1.7 times faster. Nivea A100 chips used to train ChatGPT.
With a price-to-earnings (P/E) multiple of just 20, Alphabet stock is cheap compared to other AI leaders. MicrosoftAt a P/E of 26, and Nvidia, which trades at a P/E of 60.
2. Global-E Online
Like Alphabet, Global-E is a tech stock recovering quickly from the 2022 bear market, with shares up 41% year-to-date. Business is booming. And the company’s pick-and-shovel strategy helps protect against some of the uncertainty in consumer-facing e-commerce.
Instead of selling products directly to consumers, Global-e helps merchants expand globally by providing services such as customs compliance and local customer service. These services help customers sustain and grow their businesses, ensuring that their needs are taken care of, even in uncertain economic times.
Image source: Getty Images
Fourth-quarter revenue rose 66 percent to $839 million, while earnings before interest, taxes, depreciation and amortization (EBITDA) nearly doubled to $21.8 billion.
Global-E is not consistently profitable based on generally accepted accounting principles. (GAAP), so it cannot be valued based on earnings. And while the price-to-sales (P/S) ratio of 12 is quite high, this premium reflects its rapid growth rate and the potential for higher earnings in the future as the business matures.
Which company is best for you?
Alphabet and Global-E Online are both great choices for investors looking to bet on a tech recovery, but they serve different investment strategies. As a consistently profitable and mature company with a relatively low price tag, Alphabet is more attractive. Value-oriented investors. On the other hand, Global-e offers more explosive growth potential, although conservative investors may be overestimating.
Susan Frey, an executive at Alphabet, is a member of the Motley Fool’s board of directors. Will Ebing has positions in Global-e Online. The Motley Fool has positions and recommends Alphabet, Global-e Online, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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