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Why Google is a better stock bet than Facebook right now

April 30, 2020, 12:38 PM UTC

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For years when I first moved to Silicon Valley, I wrote about tech stocks, first at The San Jose Mercury News, then the TheStreet.com, and finally, occasionally, at Fortune. I disliked the who’s up/who’s down nature of the game; I always loved the rat-a-tat-tat of kicking it around with market professionals, all of whom are paid to have a point of view.

Wednesday, I hosted a Data Sheet conversation with Gene Munster of Loup Ventures and a longtime stock analyst with Piper Jaffray. You can listen to the whole 28-minute call here. Some highlights:

  • Munster is a perma-bull on Apple, and he thinks it is grossly undervalued today. He thinks Apple suffers from a “hardware discount,” the persistent belief among investors that hardware companies eventually fail. He doesn’t think Apple will fail—he thinks it’ll be the first $2-trillion market-cap company.
  • The lesson of Google’s better-than-feared quarter is that search performance is returning to normal. He thinks Google, or Alphabet actually, is a better diversified bet than Facebook and therefore a better play on the future. (Facebook didn’t do too shabbily Wednesday in its earnings report.)
  • A listener asked if we should declare Amazon a national asset, in other words, a regulated utility. Munster hates that idea.
  • Tesla is eating the car market, in part because young people love the brand. It’s not an apples to apples comparison, but Munster notes that Tesla’s global shipments recently were up 40% while U.S. automaker sales were down 29%. He sees the traditional market getting hollowed out.
  • Munster likes Zillow, which recently suspended its house flipping business. He sees it as a long-term thing, not a stock to buy when buyers can’t do a walk through.
  • Like me, Munster is a 5G bull. So I asked him what concerns him about the allegedly transformative communications technology. His answer: the extreme hype, the lack of immediate use cases, the way it will vanquish battery life. He thinks it is dangerous for investors but good for the world.

The world is falling apart, layoffs and food lines are mounting, and so much about the epochal pandemic remains unknown. And still there are tech stocks to discuss.

Adam Lashinsky

@adamlashinsky

adam.lashinsky@fortune.com

This edition of Data Sheet was curated by Aaron Pressman.

NEWSWORTHY

Just think of something stupid to say and then don't say it. Speaking of stocks, a bunch of tech companies released earnings last night. But forget the numbers. The real headline was Tesla CEO Elon Musk calling out San Francisco's work-from-home order as "fascist" while praising China's investment in its infrastructure. For a smart guy...

Advanced statistics for dummies. Okay, let's not totally forget the numbers. Microsoft's sales jumped 15% to $35 billion, better than analysts expected, and CEO Satya Nadella said he thought gains for cloud computing during the pandemic will stick. Microsoft's stock, already up 13% this year, gained another 2% in pre-market trading on Thursday. Facebook said ad spending sharply slowed in March but stabilized in April. Its revenue increased 18% to $17.7 billion. The company's stock, previously down 5% in 2020, erased that loss with a 9% jump in pre-market trading. Spotify reached 130 million paid subscribers, up 31%, and revenue of $2 billion, up 22%. Its stock gained 11% in trading on Wednesday and is now in positive territory for the year, with a 4% gain.

More is more. At eBay, net revenue slipped 2% to $2.4 billion. The company's stock, up 8% this year previously, slipped 4% pre-market. And Qualcomm's sales gained 7% to $5.2 billion, but the company predicted a deep drop in phone sales for the year due to COVID-19. Qualcomm's stock, down 11% in 2020, gained 2%. At Twitter, revenue rose just 3% to $808 million. That was better than what was feared. Its shares, previously down 3%, jumped 9%.

Fuel to the fire. We have been inaccurately reporting Zoom usage, but it's partly Zoom's fault. The company did not have 300 million daily active users. It has had that number of daily meeting participants, a figure which counts a single person multiple times if they attend more than one meeting per day (and, at this point, who doesn't?). Zoom itself used the incorrect phrasing on its blog, then quietly corrected the terminology. Given that the numbers helped drive its stock price, expect some federal interest in the mistake soon.

When the heat comes down. Probably also not helping Zoom's stock price, Google said it would make Meet, its premium video conferencing app, free to all users. In other news at the Googleplex, the company and partner Apple released the first APIs to developers for their exposure notification system (AKA the band previously called contact tracing).

Money is not peace of mind. Venture capital firm Andreessen Horowitz had enough success with its first fund dedicated to digital currencies and related tech that it's coming back for more. The second crypto and blockchain fund starts with $515 million, up from the $300 million in its 2018 fund.

FOOD FOR THOUGHT

We have previously discussed the challenges facing schools and students forced to shift to online and remote learning. Now some districts are throwing in the towel after deciding the online set-up just isn't worth it. Wall Street Journal reporter Tawnell Hobbs has the story of schools closing up early for summer vacation.

Schools have struggled to launch remote learning for more than 50 million children across the country during the coronavirus pandemic in the largest experiment in remote learning ever. Among the issues they’ve encountered, not all students have internet access or have parents available to help, causing concerns about inequity. As a result, many districts haven’t required schoolwork be completed or graded. Student participation, when schools are even able to measure it, has often been below regular attendance level.

The Bibb County School District in Macon, Ga., is ending school Friday for about 21,500 students—three weeks early.

“The vast majority of our community was feeling stressed,” said Curtis Jones Jr., superintendent of the Bibb County district, just over an hour south of Atlanta. “There were inequities between schools. I had teachers who were telling me, `I’m trying to figure out how to do my job as well as teach my class.’ It made sense to us to get rid of the stress and get ready for the following school year.”

IN CASE YOU MISSED IT

Cybercriminals adapt to coronavirus faster than the A.I. cops hunting them By Jeremy Kahn

4 key things to watch for in Apple’s earnings on Thursday By Aaron Pressman

Lyft to cut or furlough 1,300 employees amid the coronavirus pandemic By Danielle Abril

Where will Bitcoin go after ‘The Halvening’? By Robert Hackett and David Z. Morris

GDP shrinks 4.8%—but what comes next will be far worse By Lance Lambert

Scammers have registered 150,000 fake stimulus check websites. Here’s how to protect yourself By Lee Clifford

Coronavirus patient data stored in electronic health records found difficult to study at scale By Fred Schulte and Kaiser Health News

(Some of these stories require a subscription to access. There is a 50% discount for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)

BEFORE YOU GO

There have been some complaints in the Pressman household during lockdown that nightly dreams have gotten bogged down in the mundane. National Geographic has something to stimulate richer visions during your next sleep: vivid pictures of a new dinosaur find. I hope you weren't expecting something calm and soothing.

Aaron Pressman

@ampressman

aaron.pressman@fortune.com