As Alphabet (GOOG, GOOGL) considers various deals and AI investments, MoffettNathanson Senior Research Analyst Michael Nathanson joins Yahoo Finance Live to share his outlook.
Nathanson states that Alphabet’s M&A strategy “is very targeted.” He notes that if they identify an opportunity or start considering a deal, “it’s hard to challenge their track record.” Nathanson says that as Alphabet delves into AI investments, it could be “revolutionary,” particularly with YouTube, suggesting they could emerge as “the winners” in the forthcoming AI revolution.
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Editor’s note: This article was written by Angel Smith
Video Transcript
JOSH LIPTON: Google Reuters Reporting, I’m sure you saw this. Google is talking with advisors, potential offer here for HubSpot, does that make high level strategic sense to you, Michael?
MICHAEL NATHANSON: You know, I don’t know enough about it. I’ve always deferred to when it comes to Google’s M&A. They’re highly targeted, right? They do not do large deals. Their engineers are best in class. If they see an opportunity, I’ve always deferred like, look, whatever they think makes sense, it’s hard to challenge their track record and their knowledge. And these deals are never that dilutive because it’s such a large company, and they’re sitting on so much cash.
So I would say that is less of a concern to me than almost any other type of M&A I’ve seen in my career.
JULIE HYMAN: Well, Michael, while we’re talking about Alphabet, you had a note on it recently, a few days ago, where you sort of revisited your thesis about it being this media giant that is still somehow sort of underestimated as the owner of YouTube. And it’s true we don’t talk about it as much. We also have been talking about generative AI mostly as it relates to search and less as it relates to something like YouTube. And I’m just wondering what you think the opportunity is there if there are things that were sort of missing on that front.
MICHAEL NATHANSON: That’s a great question because generative AI– what will happen is it will open up the ability to create great content for more people at a lower cost. And I think it’s going to be revolutionary in terms of what the average person will be able to do. And YouTube would be the best discovery platform to find the best in user-generated AI. So I see a potential sea change in the quality of user-generated content that will be coming. And YouTube’s done a great job of cultivating these creators.
And I think YouTube will benefit as more content becomes democratized through AI. So something we don’t talk about because it’s so early in the development, but I think YouTube will be one of the winners of the AI revolution that’s coming.
JOSH LIPTON: Michael, it was great to have you on the show today. Thanks so much for joining us.
MICHAEL NATHANSON: Thanks for having me. Appreciate it, Josh.