Alphabet is way Cheap | Nasty US economic data

🎙 Episode Summary: This week, Simon unpacks Alphabet’s surprisingly cheap valuation, troubling US economic data, South African CPI figures, Trump’s trade mess, and the implications of Aspen’s customer fallout. Plus, he previews the Berkshire AGM and upcoming JustOneLap events.

📉 US Economic Data Shock

• Q1 GDP: Expected +0.2%, came in at –0.3% 😬

• Imports surged 40%, skewing GDP down

• Retail inventories and trade balance signal deeper issues

• PCI inflation at 1.8% vs. 1.2% expected

• Recession fears intensify

US GDP Q1 2025

🇺🇸 Trump’s 100-Day Trade Tangle

• Trump promised 90 trade deals in 90 days — none signed yet

• India might come to the table soon

• Tariff chaos continues, shelves may empty by July

• Xi Jinping not engaging — trade uncertainty remains high

📊 Alphabet (GOOGL) is Looking CHEAP

• PE under 20, forward PE ~17 🔥

• YouTube: $9B in rev, larger TV share than Netflix

• Cloud turning profitable; Waymo surging

• Risks: Antitrust cases, weakened core search, AI competition

• Analyst sentiment: 13 Strong Buys, 39 Buys, 12 Holds

• Price targets: Avg $202, High $240

🧠 Search Wars: Google vs. AI

• Google Search = cluttered & ad-heavy

• Simon prefers Perplexity & ChatGPT for clean, accurate info

• Questions around ad revenue in AI-driven search era

💥 Aspen: Trust Broken

• Lost a major take-or-pay client 🧪

• Share down ~33%; questions around facility utilization

• Replacing lost volume could take 12–18 months

• Confidence in management fading

Aspen | Weekly 29 April 2025

📉 SA CPI Drops to 2.7%

• Well below target band midpoint of 4.5%

• Inflation lowest since mid-2020

• Will SARB cut rates? Depends on FOMC outcome on 7 May

📚 Budget 3.0 Incoming

• New budget after VAT hike rejection

• 21 May – Stay tuned for more policy drama

🏛 Berkshire Hathaway AGM

• Saturday @ 14:30 SA time 🧓

• First meeting without Charlie Munger

• Warren Buffett expected to address investment outlooks and succession

Simon Brown

* I hold ungeared positions.

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