Mark Mahaney on Google's AI Potential, Amazon, and Uber Stock Picks

Google's Underappreciated AI Play

• 💡 Google is identified as a dislocated, high-quality company with an underappreciated AI play, despite underperforming other 'Mag Seven' stocks year-to-date.
• ⚠️ Overhangs related to a government antitrust case and competition from ChatGPT are acknowledged but seen as potentially temporary.
• 🎯 A key catalyst for Google's stock is a clearing event in August regarding the DOJ case, with the worst-case scenario (forced sale of Chrome, ban on search distribution payments) deemed unlikely.
• 📈 Google needs to demonstrate the ability to monetize AI searches (GenAI, AI Overview) as effectively as traditional searches to maintain its search revenue growth and achieve a multiple rerating.
• 🚀 The thesis suggests that removing these overhangs could lead Google's earnings multiple to expand from 17x to 20-25x, similar to Meta.

Amazon's Position and Challenges

• 🥈 Amazon is the second-highest pick, with two main overhangs: tariff issues and the need for AWS to show reacceleration in growth.
• 🚚 Amazon's sophisticated supply networks and diversification efforts are seen as mitigating tariff concerns.
• ☁️ The critical factor for Amazon's stock performance is whether AWS can demonstrate growth comparable to Microsoft Azure's recent success with GenAI.

Uber's Growth and Autonomous Future

• 🥉 Uber is the third pick, having significantly outperformed Tesla in the first half of the year.
• 🚗 Uber's success is attributed to successful rollouts of Waymo in Austin and Atlanta, with potential for more AV company partnerships (e.g., Zoox, Chinese players, Mobileye).
• 🧩 The availability of multiple AV vendors is seen as beneficial for Uber's economics as a demand aggregator.
• 📦 The delivery business is highlighted as the world's largest, providing further insulation for Uber's overall business.
• 💰 Despite a 50% year-to-date rise, Uber's stock is considered to have room for growth, trading at 18-19x free cash flow, with potential to reach 25x as AV rollouts expand.