DA Davidson’s latest analysis argues that a complete breakup of Alphabet (NASDAQ:GOOGL) stands as the solution to its valuation challenges, aiming to transform it into leading companies across various segments including search, video, cloud, AI, and hardware.

Limitations of Partial Spin-Offs

• Conglomerate Discount: Alphabet trades at roughly 16x forward earnings, with its diverse units subject to a single multiple.
• Regulatory Challenges: Mandated divestitures may not yield the necessary value.
• AI Profit Miss: Current AI advancements are benefiting competitors more than Alphabet itself.

Justification for a Full Breakup

DA Davidson proposes that separating key segments could allow each to thrive independently:

1. Search & Ads
2. YouTube Streaming
3. Cloud & AI Infrastructure
4. Hardware & Edge AI
5. Mobility & Urban Tech

Potential Share Valuation Increase

The analysis estimates a substantial increase in value could rise from $243 towards $300 per GOOGL share.

Key Radar for Investors

• Founders Involvement: Signals from Brin and Page would greatly impact market perception.
• Check Regulatory Developments: Tracking antitrust movements can provide essential insights.
• Segment Reporting: Upcoming earnings reports will be crucial in evaluating unit performance.

Investors should prepare for significant shifts as Alphabet repositions itself in the marketplace.