Why I Removed Google From My Top Stocks List

If you’d told me a few months ago I’d be cutting Google (or Alphabet, or whatevert name they have when this comes out if they decide to rebrand again) from my top stocks list, I’d have told you to go check if your coffee was spiked.

Google, in many ways, has been like that old reliable donkey we all rely on to carry our heavy loads on a scenic hike: slow, steady, and with fewer complaints than the average donkey. Except Google was never slow and donkey like, it grew into a behemoth that redefined “search,” ad revenues, AI aspirations, autonomous cars, and even how you watch your cat videos (hello, YouTube). So, removing it from my top 20 wasn’t a trivial decision.

I know what you’re thinking.

Has Tom finally lost it? 

Perhaps I didn’t get my daily dose of vodka and now I’m kicking out one of the biggest corporations on Earth from my list of top picks. But folks, hear me out. While I have not lost my love for YouTube or my gratitude for those times Google Maps saved grandpa from driving into a lake (long story), I have reasons—some major reasons—why Google is no longer on my top 20 roster.

Recap:

• A Brief Walk Down Memory Lane

• Reason #1: The AI Threat That Google Helped Spawn

• Reason #2: Advertising Growth Hitting a Wall

• Reason #3: The Overlooked Cloud Competition

• Reason #4: Regulatory and Legal Storm Clouds

• Reason #5: The Valuation Squeeze (Overvalued or Fairly Valued?)

• Short-Term vs. Long-Term Outlook

• The Macro Clouds: U.S.-China Tensions, Export Controls, and Market Volatility

• Hedging, Implied Volatility, and Options as a Canary in the Coal Mine

• Philosophical Ramblings on Tech Giants and Disruption

• Conclusion: Why Google Isn’t in My Top 25—For Now

Buckle up, folks. Yes, this is going to be a doozy. You might need that coffee refill along the way.

1. A Brief Walk Down Memory Lane

Google and I have had a relationship about as old as that dinosaur they keep in the Googleplex courtyard (don’t quote me on the actual dinosaur, but I think there’s a T-Rex skeleton named “Stan” lurking). For a long time, I’ve had nothing but respect and bullishness for the multi-tentacled beast that is Alphabet:

• Search has redefined how we gather information. Gone are the days where you rummage through dusty encyclopedias for a fun fact about the Mongolian empire—now you “Google it.”

• YouTube revolutionized user-generated content, gave birth to a million cat videos, cooking channels, and yes, random guys like me analyzing stocks.

• Android democratized the smartphone market globally. If iOS is the sleek sports car, Android is the unstoppable workforce of reliable sedans that practically everyone can access.

• Google Cloud has attempted to carve out a slice of the enterprise infrastructure pie. It’s the third kid on the block behind AWS and Azure, but it’s a formidable brand and is still generating strong top-line growth.

Over time, I’ve used multiple metrics—the Rule of 40, forward P/E ratios, PEG ratios, and good ol’ fundamental analysis—to keep Google in my top picks. Historically, Google’s consistency in beating the Rule of 40 (growth % + profit margin >= 40) signaled a healthy blend of growth and profitability that’s rare among big tech.

In January of 2025, I remember writing something like, “Google: Rule Of 40 Still Points To Buy.” That was during a golden stretch where its combination of strong ad revenues, unstoppable search dominance, and big leaps in AI left me starry-eyed. But as you’ll see, the honeymoon glow wore off. Recent developments have caused me to reevaluate.

2. Reason #1: The AI Threat That Google Helped Spawn

Let’s start with the 100-trillion-parameter elephant in the room: Artificial Intelligence. In my earlier days (in the prehistoric years of 2017, 2018, and so forth), Google was practically the face of AI research. They published groundbreaking papers, cultivated top-tier AI researchers, and told the entire world that the future was “AI first.”

So how is AI messing with Google now? 

Well, ironically, it’s messing with them by attacking their biggest fortress—Search.

2.1 Chatbots and the Disruption of Traditional Search

The big game-changer: OpenAI’s ChatGPT.

Microsoft swiftly integrated an AI-powered chat into Bing, aiming to deliver direct, contextual answers rather than a list of blue links. Suddenly, the entire world realized: “Wait, do I need 2 million search results on page 1, or do I just want a single well-articulated answer?”

When you shift from “10 blue links” to “one direct, AI-generated response,” it changes everything:

• Users might spend less time scrolling through Google’s curated search results.

• Publishers worry about how to get discovered if chat-like answers bypass their websites.

• Advertisers wonder how pay-per-click ads factor into an AI-powered environment that might only show text-based answers.

Google tries to respond with Bard and a flurry of announcements about AI-driven search. They are not incompetent here.

Far from it. But the market’s response was: “You’re late, and you’re playing defense.” When you have to defend your largest moneymaker from the fresh new kid (OpenAI) with the big muscle buddy (Microsoft’s Bing) behind them, that’s not a comfortable position for a giant.

2.2 Search Generative Experience (SGE) and the Beta Approach

In its next iteration, Google introduced the Search Generative Experience (SGE) to a limited group of testers. There’s potential. Early feedback suggests that the AI Overviews, which attempt to unify direct AI answers with more typical search results, might keep users on the page. But is that good for the advertisers? For content creators? Possibly not so much—and that’s the real conundrum.

Remember, Google’s search business is basically an ad business with a search engine attached. If generative AI starts overshadowing all those links, then publishers get less organic traffic. If publishers get less traffic, they might adapt or protest, advertisers might have to pay more for exposure, or shift budgets to other platforms. Meanwhile, Google could see a portion of its $100+ billion search-ad empire face friction.

I’m not saying it’s going to vanish overnight. But when the biggest search engine in the world needs to drastically change how it monetizes or risk losing share to AI-based alternatives, that’s a source of major uncertainty.

2.3 AI Tools from Competitors (Meta, Amazon, Others)

Let’s not forget the rest of Big Tech. Meta is rolling out advanced AI tools in their “Family of Apps,” which might facilitate search-like capabilities in Instagram or Facebook. According to some surveys, half of Gen Z start brand or product searches on social media platforms anyway. Meanwhile, Amazon is quietly implementing AI to enhance e-commerce search.

Suddenly, “just Google it” might become “just ChatGPT it” or “just ask Bing, Alexa, or Instagram.” That, my friends, is a fundamental shift that a few short years ago seemed unthinkable.

Hence, my first and biggest reason: AI is a direct threat to a massive chunk of Google’s core search revenue. Google remains a big AI force. But ironically, its dominance is precisely what’s put it under the bright spotlight of AI challengers.

3. Reason #2: Advertising Growth Hitting a Wall

Now, let’s pivot to reason #2, which is somewhat linked to reason #1. Ads. Ads. Ads. The thing that has minted Google more money than my grandma used to do crocheting blankets for her entire neighborhood (she never actually made money, she just gave them away—grandma, if you’re reading, that’s not how capitalism works).

3.1 Post Pandemic Shifts and the Election Year Bump

We had a couple of years where digital ad spend soared due to the pandemic pushing everything online. Then in 2024, there was a massive U.S. election cycle that contributed to a surge in political ad spending on platforms like YouTube. So, great—2024 was a strong year for ad revenue.

But guess what? The problem with election-related ad spending is that it’s cyclical. It’s not an every-year growth driver. Come 2025, that tailwind is gone. And as management quietly mentioned in recent calls, they’re seeing some headwinds as certain verticals that spent big in 2024 (like financial services) are cooling. That’s like having a big sugar rush and then crashing.

3.2 Competition from Meta and Amazon

And then there’s Meta. Their platforms—Facebook, Instagram, WhatsApp, and the new Llama-based AI search inside the Family of Apps—are increasingly absorbing ad dollars. The only thing more unstoppable than a toddler’s meltdown is Mark Zuckerberg’s ability to find new ways to monetize eyeballs.

Amazon is also stepping up: product searches on Amazon continue to steal share from Google. If you know you want to buy a coffee machine, you might just Amazon it, skipping Google entirely. That’s more ad dollars staying on Amazon’s platform, especially with the rise of sponsored product listings and brand storefronts.

3.3 Younger Demographics and Social Search

Then we have the infamous TikTok effect. Younger users are using TikTok not only to watch silly dances but also to search for product reviews, travel tips, local recommendations, and more. I know, it’s bizarre. We’re witnessing a generational shift: the person who was 18 in 2020 is now 23, and they’re not automatically going to google something. They might type it into TikTok or Instagram.

While Google remains a juggernaut, these incremental losses in user behavior can add up. Over time, even a small percentage shift in younger demographics can produce a big dent in total ad revenue potential.

4. Reason #3: The Overlooked Cloud Competition

Now, let’s talk about the Cloud. For a long time, I believed that Google Cloud could be a serious needle-mover for Alphabet. And to be fair, it is—30% year-over-year growth in Q4 2024 is no joke. But the question is: is that enough?

4.1 Slowing Growth Relative to Azure

Check out the fact that Microsoft Azure continues to grow near or slightly above that same 30% pace, even though Azure is bigger by market share (around 20%) compared to Google Cloud’s ~12%. Usually, the smaller player is expected to show faster growth. The fact that they’re neck-and-neck in growth suggests Google Cloud might not be catching up in a meaningful way.

4.2 CapEx and the AI Compute Race

Google Cloud invests heavily in AI data centers. The CFO specifically said they plan on spending $75 billion in CapEx for 2025, partly to ramp up AI infrastructure. That’s a monumental sum. This massive CapEx means the forward margins get squeezed by higher depreciation.

At the same time, Amazon Web Services (AWS) remains the big kid on the block. They’re also investing billions in AI hardware. Microsoft with Azure is doing the same. The trifecta of AWS, Azure, and Google Cloud is playing an arms race in data-center expansions. This leads to a scenario where there might be oversupply or margin pressure as they each scramble to land the biggest enterprise AI workloads.

If Google Cloud can’t gain ground in this hypercompetitive environment, it becomes more of a cost sink than a serious margin booster.

4.3 Path to Profitability?

Yes, Google Cloud is no longer losing a fortune, but it’s also not the next big margin driver. The big question: is Cloud going to offset any potential decline (or flattening) in the search-ad business? Or does Cloud remain, at best, a decent supplement that never quite takes the #2 or #1 spot in the hyperscaler universe?

I’m leaning on the cautious side. Sure, they’re winning deals, but not at a breakneck pace. If the entire pie’s growth slows, or if competition forces discounting, you could see the Cloud segment’s margin story remain subdued.

5. Reason #4: Regulatory and Legal Storm Clouds

Now we come to a fun subject: litigation. I know, I know—this is that part of the bedtime story that puts the kids to sleep, except for the lawyers who perk up and start salivating at the mention of antitrust and DOJ.

5.1 Ongoing Antitrust Cases

Google’s been in the crosshairs of regulators for years. We have:

• DOJ lawsuits in the U.S. focusing on Google’s dominance in search and advertising.

• EU regulators (and you know how the EU loves big fines for alleged monopolistic practices).

• Potential new complaints about how Google might integrate AI with search.

It’s uncertain how these lawsuits will resolve or how big the fines might be. But more ominously, if these regulators enforce major structural changes—like forcing Google to break up or not favor its own products in search results—the core business model could be impacted.

5.2 U.S. China Tensions and Export Controls

Let’s not ignore the elephant from the East: the trade tensions between the U.S. and China. If these tensions keep escalating, we might see further restrictions on exporting advanced chips, data-center hardware, or AI technologies to China. That might affect Google’s supply chain or hamper its ability to scale certain data centers cost-effectively.

While Google’s user base in China is minimal (thanks, Great Firewall), the broader supply chain for advanced AI chips or servers is definitely global. Potential hiccups here add to the complexity and cost.

6. Reason #5: The Valuation Squeeze (Overvalued or Fairly Valued?)

Let’s talk about valuations. Don’t you love it when you find a stock that’s like a hidden gem in your grandma’s attic, and it’s trading at a massive discount to fair value? That’s not the case with Google right now.

6.1 On Par with Historical Averages

Recently, Google’s forward P/E ratio has hovered around the mid- to low-20s range. Historically, we might say Google’s “fair value” multiple has been around 23–25x forward earnings. Guess what? We’re basically there.

Sure, you can attempt a DCF (Discounted Cash Flow) model with assumptions of 10% or 15% growth rates. If you’re super bullish and think Google can keep cranking out double-digit growth for the next decade, maybe you’ll find some upside. But a lot of the easy growth is behind them.

6.2 The PEG Ratio Isn’t Screaming “Buy Me”

Another metric some folks like: the PEG ratio (P/E to growth rate). If we see Google’s growth decelerating to near single digits—like 10% or 12%—and the forward P/E is 20+, then we’re looking at a PEG around 1.7 or 2, not exactly “table-pounding buy.”

6.3 The Street’s Mixed Reactions

By now, you might have seen analysts toggling between “Hold,” “Sell,” or “Buy.” Some folks remain bullish because “it’s Google, come on,” but others worry about near-term macro headwinds, ad slowdowns, and the cost of AI. The consensus EPS for next year sees only modest expansion. If that EPS figure misses even slightly, the stock multiple might compress.

7. Short-Term vs. Long-Term Outlook

If you asked me: “Hey Tom, what about 10 years from now?” I’d probably say, “Google is still going to be in business, generating oodles of cash from something.” This is not a doomsday scenario. I’m not predicting Google to vanish or become the next BlackBerry or MySpace.

But for my top 20 stocks—the ones I feel have the best risk-adjusted potential—I want something more. I want clarity on growth, more confidence in how they navigate the AI revolution, and fewer question marks around regulatory drama.

• Short-term (6–24 months): We have choppy waters. The AI threat is real, the ad business growth could slow from cyclical and structural shifts, and massive CapEx might weigh on free cash flow.

• Long-term (3–10 years): If management can pivot swiftly, maybe launch a truly integrated AI approach to search and prove they can monetize it effectively, Google might come out stronger. But they have to do it without scaring advertisers away, and they must keep regulators at bay.

At this moment, there are simpler, more straightforward stories out there. If I had to pick 20 stocks to weather the next couple of years, Google is no longer one of them.

8. The Macro Clouds: U.S.-China Tensions, Export Controls, and Market Volatility

We can’t talk about big tech without acknowledging the macro environment. Interest rates matter. The 10-year Treasury yield is the yardstick for discounting future cash flows. If that yield goes up, growth stocks can take a hit—especially when their growth narrative has warts on it.

In the last few months, we’ve seen that yield fluctuate. Sometimes it dips, sometimes it spikes. We also have equity markets reacting to every whiff of new data about inflation, rate hikes, or Fed commentary. For a trillion-dollar market-cap giant, that means you can get big swings in the stock price—and that’s not always good when your fundamentals have question marks.

Q4 2024 showed us a scenario where the tech sector pulled back around 5%, and in tandem, the 10-year Treasury rate dropped. That indicates a flight to safety, ironically. Investors might be anticipating a slowdown or a risk-off environment. If Google’s next earnings (Q1 2025, Q2 2025) underwhelm, the stock might get hammered more than we’d expect.

And if the U.S.-China tensions escalate, further hamper supply chains, or ratchet up regulatory headaches—Google might face even more headwinds.

9. Hedging, Implied Volatility, and Options as a Canary in the Coal Mine

Many of you know I like to use the options market to gauge short-term sentiment. If implied volatility (IV) is high, it means the market is pricing in bigger moves (risk or reward). When IV is surprisingly low, but I see big potential uncertainties, that suggests a discrepancy.

For Google:

• The IV has hovered around average or slightly below, indicating the market might be ignoring or underestimating the uncertainties.

• Some analysts have pointed out that buying put options could be an economical hedge for those who still hold long positions. Because if the near-term risk is bigger than the market’s pricing in, those put options might be too cheap.

When I see this scenario, it doesn’t boost my confidence in the short term. If I needed to keep a stake in Google, maybe I’d buy protective puts. But given my stance that the risk-reward ratio is no longer super attractive, I decided to reduce or exit my position for now.

10. Philosophical Ramblings on Tech Giants and Disruption

Let me wax philosophical for a moment. Disruption is rarely telegraphed. Usually, a giant like Google doesn't see its moat threatened until something big—like AI chat—pops up from outside. But historically, any giant that’s made 80% or 90% of its revenue from a single product (search ads in Google’s case) is vulnerable if that single product sees fundamental change.

Microsoft faced this with Windows when the internet soared. IBM faced it when mainframes gave way to personal computing. Giants sometimes reinvent themselves—IBM pivoted to services, Microsoft pivoted to cloud, Apple pivoted from Mac to iPhone, etc.

Now it’s Google’s turn to pivot or face the consequences. They might do it successfully, but that’s not guaranteed. They have an internal culture that’s famous (or infamous) for big, sprawling projects but also for struggling to unify them into cohesive products (just look at the graveyard of Google Reader, Google+, etc.). If they fail to unify AI across their ecosystem seamlessly, they risk letting others define the next generation of consumer technology.

10.1 The Power of “Brand” vs. The Power of “Habit”

Google’s brand is strong. Let’s not kid ourselves—“Google” is a verb in our daily language. That brand power is a cushion that can’t be overstated. But younger generations might not be as brand loyal if the product doesn’t keep up with their evolving behaviors.

10.2 The Innovator’s Dilemma

Yes, let’s quote Clayton Christensen, because that’s what stock analysts do to sound sophisticated. The “Innovator’s Dilemma” is when a successful company struggles to adopt new innovations because it cannibalizes its cash cow. For Google, that’s the fundamental problem. The better AI-based search is at delivering immediate answers, the fewer reasons people have to click on multiple links, thereby reducing ad impressions. Google must find new ad models that integrate seamlessly into AI-driven answers.

It can be done, but it’s not a trivial problem. And for that reason, I’m not comfortable betting that Google will quickly figure out how to pivot while preserving revenue growth.

11. Conclusion: Why Google Isn’t in My Top 20—For Now

So here we are. Let me recap in plain English:

• AI Overthrow: The big boogeyman is that AI chat solutions—some from Microsoft/OpenAI, some from Meta, or even from inside Google—threaten the very structure of “search” as we know it. That’s a major unknown for the ad revenue business.

• Advertising Growth Stalls: After a big election year and some strong vertical-specific booms, we might see a cyclical and structural slowdown. Competition from Amazon, Meta, and TikTok is no joke.

• Cloud Competition: Google Cloud is good—but not good enough to dethrone AWS or Azure. Growth is slowing, and it’s overshadowed by massive CapEx that could weigh on margins.

• Regulatory Woes: Ongoing antitrust suits, the looming threat of legal action, and possible forced breakups or fines add an extra layer of uncertainty.

• Valuation: The stock trades around fair value multiples. We’re not looking at a table-pounding buy, especially if growth decelerates.

Put simply, my top 20 stocks are the ones where I see big upside with more limited downside. Google, as of now, has a risk profile that’s no longer super compelling to me. Could it bounce back and overshadow these concerns? Possibly. Maybe if:

• Bard or SGE quickly matures into an AI-driven interface that redefines search (and advertisers line up to pay for new ad formats).

• Google Cloud leaps forward in market share or profitability.

• The lawsuits end in minor wrist slaps and no significant structural changes.

But those are big ifs.

11.1 Will I Revisit Google in the Future?

You bet. I’m not some stubborn guy who sees the writing on the wall and refuses to adapt. If I see evidence that Google has cracked the monetization code for generative AI in search or that it’s expanding Cloud with strong margins, I’m open to re-adding it to my top 20. There’s a reason I used to love them. But for now, capital is finite, and I have to pick my battles.

11.2 An Encouraging Sign: AI Monetization So Far

One quick nod to an encouraging sign: Google’s early test runs with AI Overviews apparently see monetization close to the traditional search rates. That’s a reason to keep them on your watchlist. If they can sustain or even enhance that rate as they scale AI-driven search, the gloom might be overdone. But that’s still in the early innings.

Final Thoughts (In 4,000 Words, We Could Write a Novel, Right?)

I’m almost done with my novel here—congratulations if you’ve made it to the end. My removing Google from my top 20 is not me saying “Google is doomed forever.” It’s me saying, “I see better opportunities with fewer question marks for the next couple of years.” When a giant is forced to cannibalize its own search business to stay ahead in AI, that’s an uneasy pivot.

No one should forget the sheer brilliance and resources Google has at its disposal. It’s been one of the biggest innovators in AI (TensorFlow, Waymo, DeepMind’s achievements). It has near-limitless capital to invest and a brand that is, for now, second to none.

But the next 12 to 24 months hold too many uncertainties: AI disruption, rising competition for ad dollars, an expensive cloud arms race, possible legal/regulatory constraints, macro volatility, and a stock valuation that’s arguably priced for near-perfection. For me, that’s not a place I want to park an outsized chunk of my capital.

Does that mean Google’s stock is going to zero? Relax, folks. No. They have over $100 billion in cash and an array of moonshot projects. But there’s a difference between being a stable, massive company and being one of my top 20 picks for alpha. Right now, it’s more the former than the latter.

11.3 My Personal Philosophy

As I often say: “When a stock’s story changes, so should you.” Google’s story has changed. The unstoppable search giant is facing a new wave of challengers in AI, a macro environment that’s no longer as friendly, and an uncertain regulatory path.

I’m basically that coach who’s benching his star player for a few games because they’re off their game, carrying a mild injury, and the upcoming schedule is brutal. They might come back better than ever, or they might need some rehab time. But I’m focusing on the players I trust to thrive in the current environment.

Is that coach a fool? Possibly. But hey, I’d rather preserve my lead in the scoreboard than hope for a miraculous comeback while ignoring the glaring issues on the field.

So, there we have it.

If you’re a hardcore Google bull, I salute you—there’s still a decent chance they come out shining. Just remember, keep your eyes open for the negative catalysts I’ve discussed.

If you’re neutral or bearish, we might be on the same page. But always do your own due diligence—my take is just one viewpoint.

And if you’re bored by all of this, well, at least I hope you enjoyed the jokes and that you’ve scheduled your next vacation: definitely use Google Flights to find cheap fares—because ironically, I still love using their products!

Final Disclaimer

I am not a financial advisor. Do not take any of this as financial advice. Do your own research, consult a professional, ask your uncle who has been investing since the ‘80s, or follow your cat’s instincts—whatever floats your boat. Investing involves risk, so if you invest in Google, you could lose money, you could make money, or you could just end up in an endless cycle of reloading your portfolio page.

The future is uncertain.

Thank you for reading this monstrosity of an article. You are an absolute champion for making it this far. Let me know your thoughts in the comments, and we can keep the conversation going like the unstoppable tidal wave of Palantir crashing memes on X.

Until next time,
Tom