Pivotal Initiates Coverage of Google and Meta with Buy Ratings

Pivotal Research Group has recently initiated coverage of two tech giants, Google (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META), with Buy ratings, highlighting their strong competitive positions and growth potential. This article explores the primary reasons behind Pivotal's bullish outlook on these companies and the potential risks and challenges they face.

Pivotal analysts view Google and Meta as dominant players in their respective markets, with strong market positions and growth opportunities. Google, with its 90% global search market share outside of China, is recognized for its dominance in video/audio streaming through YouTube and its leading web browser, Chrome. Meta, known for its extensive portfolio of social media platforms, is praised for its management's ability to innovate and respond to competition.

Google's search business was recently deemed a monopoly, and the Department of Justice (DOJ) and a judge are considering remedies that could impact its market position. Despite this, Pivotal views the current valuation of Google as reflecting conservative post-2027 search revenue declines. Potential regulatory outcomes are not expected to be resolved soon, but Pivotal suggests that a Kamala Harris victory could lead to more favorable settlements for Google.

Meta faces potential regulation and market dominance investigations, as well as challenges posed by Google and Apple (NASDAQ: AAPL) in AI. Nevertheless, Pivotal believes that Meta's positives, including its aggressive management and attractive valuation, outweigh the potential negatives.

Pivotal's buy ratings for Google and Meta compare favorably with other analysts' opinions. Of the 48 analysts covering Google, 46 have a Buy or Hold rating, while 2 have a Sell rating. For Meta, 56 analysts have a Buy or Hold rating, and 2 have a Sell rating.

Google's primary growth drivers include its strong search market share, dominant video/audio streaming platform, and leading web browser. Meta's growth is driven by its extensive portfolio of social media platforms, innovative products, and aggressive management.

Regulatory risks are a concern for both Google and Meta. However, Pivotal's analysts assess these risks and factor them into their bullish outlook. They view the current valuations of both companies as attractive, given their strong competitive positions and growth potential.

In conclusion, Pivotal's bullish outlook on Google and Meta is supported by their dominant market positions, strong growth potential, and attractive valuations. While regulatory risks exist, Pivotal's analysts assess these risks and remain confident in the companies' long-term prospects.