美股研究社·2025-05-20 12:14Core Viewpoint - Google is facing significant challenges in the digital advertising market, with a declining market share compared to competitors like Meta. However, its current valuation is much lower, which reduces the safety margin for continuing to hold a bearish view on the stock [1][3]. Advertising Market Performance - Google's advertising revenue growth is lagging behind the overall industry, with a 1-year CAGR of 8.5%, compared to Meta's 19.3% and the total advertising market's 14.4% [4]. - The removal of the de minimis exemption is expected to create further headwinds for Google's advertising business, particularly affecting retailers in the Asia-Pacific region [6]. Profitability and Cost Management - Despite challenges in advertising revenue, Google has shown resilience in profitability, with improvements in gross margins attributed to lower traffic acquisition costs (TAC) and slower wage growth [10]. - The company's operating profit margins benefit from healthy revenue growth and a favorable shift towards lower TAC advertising revenue [10]. Analyst Sentiment and Valuation - Analysts have a mixed outlook on Google's earnings, with a consensus indicating a more optimistic view due to the structural shift towards lower TAC search revenue and slowing wage growth [11]. - Google's 1-year forward P/E ratio is 18.0, which is a 13.1% discount compared to its 3-year median P/E of 20.8 [12]. - The stock is trading at a 43% discount relative to its peers, which is lower than its typical 33% discount over the past year [14][17]. Legal Challenges - Google is currently involved in a lawsuit regarding its advertising technology stack, with a ruling indicating that it has maintained a monopoly through bundling practices [21][23]. - The U.S. Department of Justice is pushing for Google to divest its Google Ad Manager, which could further weaken its competitive position in the digital advertising market [24]. Conclusion - While Google's valuation appears low and presents potential upside, the ongoing challenges in revenue growth and competitive pressures raise concerns about the sustainability of its profitability and market position [25].