Gene Munster, Deepwater Asset Management, joins 'Closing Bell' to discuss why he likes Alphabet, the company's culture to compete and much more.

Gene Munster of Deepwater has identified Alphabet as the best-performing 'Mag 7' stock for the upcoming year. He attributes this outlook to Alphabet's successful response to concerns about generative AI impacting its search business, as well as the company's strong financial performance in recent quarters.

Munster also points to Alphabet's Gemini AI platform as evidence of its ability to compete with OpenAI, and notes the company's large, habitual user base as a key advantage. He expects increased adoption of chatbots and AI features to drive further growth and potentially expand Alphabet's valuation.

Alphabet is best 'mag 7' stock to own for next year, says Gene Munster

Our next guest says Alphabet will be the best Mag 7 stock for the next year. Deepwater's Gene Munster joins us now. That's a bold, bold, bold statement. Why? Scott, it's for two reasons. Number one is that this bear case around them being able to compete and navigate with generative AI taken away from search, that bear case has been essentially addressed by them accelerating search from the June quarter, then again comfortably beating by 300 basis points the growth for the street in the September quarter, giving expectations that show that we're in a good place. Essentially, they're capturing all this renewed interest that people have in finding out information and tunneling that into search revenue. And the second piece is that this gets to why the stock is up today, is that this Gemini showing that they, in fact, have the chops to compete toe-to-toe from a large language model perspective against open AI is encouraging for investors that the company's culture has been reignited to compete. And so what that's important is that over the next year you're going to see more distribution. That's what the playbook's going to change for next year around these chatbots. Keep in mind that it's only about 20% of the Google population uses a chatbot daily. Big opportunity, and I think as they expand that, the multiple will go up. So why wouldn't I assume that chat GPT will get more distribution and pull it away from whatever you think Gemini 3 is going to deliver, and then the stock alphabet has already had an amazing run. So isn't a lot of what you're suggesting already in the stock? Well, let me take the second part first is as of right now it's trading at 28 times the next 12-month earnings, and that's in line with the rest of, I'll call it the Mag 6. Set that aside here, it trades at 170 multiple, so take that out of it. So yes, it has moved up, but essentially it's that regain on that first part that we talked about competing in search has kind of allowed the multiple to kind of get back on par. And so I think that that is understandable. And then the second on the distribution question, if we look at what open AI has done, open AI has done such a good job. They've been great at building the brand. Of course, they are the brand when it comes to chat bots. The good job part is them using Apple's distribution. That has not worked for them to date. They'll get another crack at that, of course, next spring when the new Siri comes out. But if you think about Google's distribution, it's just habitual. At the end of the day, there's 2.5 billion people use Google Search daily, and that compares to my estimates of about 500 million daily chat GPT users. They give a metric of 800 million weekly. But I know one is young, one is incredibly mature. You would, of course, you would expect those numbers from a search engine that's been around for forever relative to open AI. The other thing is 30 times forward for Alphabet must be significantly ahead of their historical average. It is. If you look at the historical average, it's 20 over the past five years. It's a 23 multiple, so it is measurably above that. But I wouldn't put it in the category of egregious, and I think there is, I mentioned the multiple expansion, but there is upside to earnings as well. But I want to get back to this point about the old versus the new. I think that's really important just in terms of the brand piece to this. Indeed, is open AI chat GPT is the new generation? Google has this kind of dusty kind of brand. But at the end of the day, again, Google is a habit for people. As they can convert, and you're seeing it as they're kind of encouraging AI mode when you get an AI overviews with a typical search, and then it gives you a button for AI mode. But if they start to steer some of that traffic into a pure Gemini mode, you can see them building a big $20 a month business. 80% of open AI's business today is the consumer side of chat GPT. And so I think that there is, I agree the brand is old, but I also think that it's also a habit, and I think that that's an opportunity for Google.

The Gaza Humanitarian Foundation, the U.S.- and Israeli-backed organization to distribute aid in Gaza, said on Monday (November 24) it was ending its operations after months of criticism over the deaths of hundreds of Palestinians trying to reach GHF hubs.

Tel Aviv-Yafo

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The head of Sudan's Rapid Support Forces (RSF), General Mohamed Hamdan Dagalo, said late on Monday (November 24) that his paramilitaries would immediately enter into a three-month humanitarian truce in its conflict with the country's armed forces.

Darfur

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Chauncey Billups, who was serving as head coach of the Portland Trail Blazers until his suspension, pleaded not guilty on Monday to charges related to alleged rigged high-stakes poker games.

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The Kremlin on Monday (November 24) said that a European counter-proposal to a U.S. 28-point peace plan for Ukraine was not constructive and that it simply did not work for Moscow.

Moscow

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A federal judge has dismissed the criminal cases against former FBI Director James Comey and New York Attorney General Letitia James on the grounds that Lindsey Halligan, the interim U.S. attorney who secured their indictments, was unlawfully appointed to the role.

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Nha Trang

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The Trump Administration is ramping up pressure on Venezuela as the Air Force conducted a simulated nighttime attack along the country's coast. Charlie D'Agata has the latest.

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Israel killed Ali Tabtabai, the acting chief of staff of militant group Hezbollah, in an airstrike on a southern suburb of Beirut on Sunday, the Israeli military said.

Beirut

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Kyiv

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Al Fashir

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London

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Niger

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Johannesburg

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Belém

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Washington signaled room for negotiation on a 28-point plan to end the Ukraine war, denying claims by some U.S. senators that it is a Russian "wish list," as Kyiv and European allies criticized the proposal ahead of Sunday talks in Geneva.

Geneva

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Rome

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U.S. President Donald Trump and New York City's incoming progressive mayor Zohran Mamdani were all smiles at a White House meeting, promising to set aside months of bitter feuding and cooperate on the city's future.

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Breakdown