Alphabet (GOOGL) and Meta (META) are identified as core long-term holdings due to their dominant "monopoly" positions in search, streaming, and social media. However, as both stocks may be slightly overvalued, new investors should consider waiting for a market pullback to find a better entry point. A clear strategy is to avoid traditional media companies entirely, as they face a bleak outlook and declining relevance. Instead, focus on the New Media theme by investing in the dominant platforms like YouTube that are capturing consumer attention. A positive endorsement for Adobe (ADBE) also suggests its products are well-positioned to capitalize on the growing creator economy.

Alphabet (GOOGL)

• Scott Galloway identified Alphabet as his big tech stock pick at the beginning of the year, a call that has performed well with the stock rising 30% since the pick and nearly 50% over the past year.
• The initial investment thesis was that the stock was undervalued, trading at a Price-to-Earnings (P/E) ratio of 17 when the S&P 500 average was 24.
• Galloway describes Alphabet as a "monopoly" and a much better company than the average S&P company, highlighting its key strengths:
  • Search: Google Search is the "world's largest toll booth," getting 93 to 96 times the traffic of OpenAI.
  • Streaming: YouTube is the #1 streaming platform with a 12% viewership share, ahead of Netflix's 9%.
  • Autonomous Driving: The company is #1 in the autonomous vehicle space with Waymo.
• Previous risks, such as the impact of AI on search and antitrust concerns, turned out to be a "big nothing burger."
• Galloway's current sentiment is that the stock might be "a little bit overvalued right now" after its significant run-up.

Takeaways

• While the easiest money may have been made, Galloway's view is that it's "never a bad idea to invest in monopolies."
• Investors could see Alphabet as a core long-term holding due to its dominant market positions in search, streaming, and autonomous vehicles.
• Given the comment that it's "a little bit overvalued," new investors might consider waiting for a market pullback to find a more attractive entry point.

Meta (META)

• Mentioned alongside Alphabet as a "media monopoly" and a "very strong" company.
• The growth in podcast ad revenue (18%) was noted as being slightly faster than Meta's ad revenue growth (17%), highlighting the strength of the podcasting medium.
• Similar to his view on Alphabet, Galloway believes Meta may be "a little bit overvalued right now."

Takeaways

• Meta is considered a dominant force in the new media landscape.
• Investors should be aware that, like Alphabet, the stock may be trading at a premium after a strong performance. A "wait for a dip" strategy could be prudent for those looking to initiate a position.

Investment Theme: New Media vs. Traditional Media

• Traditional Media (Cable news, newspapers, magazines, ad-supported TV) is described in extremely bearish terms as a "total sh** show."
• Mark Cuban is quoted as saying, "there's no chance I'd invest in the media ecosystem at all, anywhere."
• New Media is presented as the clear winner and a major growth area.
  • Social Media has overtaken TV as the top news source for Americans.
  • TikTok is surging as a news source, with one in five U.S. adults now getting news there.
  • Podcasting is booming, with ad revenue up 18% in 2024, growing faster than both Meta and Alphabet (albeit from a smaller base).
  • YouTube is a dominant force in podcasting, with over 1 billion monthly active podcast users.

Takeaways

• The analysis suggests a clear strategy: avoid investing in traditional media companies due to their declining relevance and poor outlook.
• Investors should look for opportunities within the New Media ecosystem. The most direct way to do this is by investing in the dominant platforms that enable this shift, such as Alphabet (YouTube) and Meta (Instagram Reels).
• The growth of short-form video and long-form podcasts are two key trends to watch.

Netflix (NFLX)

• Netflix was mentioned in a direct comparison to YouTube for viewership share.
• Netflix holds a 9% share of viewership, which is significant but less than YouTube's 12% share.

Takeaways

• This data point highlights the intense competition for consumer attention.
• While Netflix is a leader in streaming, YouTube (owned by Alphabet) is an even larger player in terms of total viewership, representing a major competitive force. Investors in Netflix should monitor how this competition evolves.

Adobe (ADBE)

• The company's Adobe Express product was featured in an ad read.
• Crucially, Scott Galloway added a personal endorsement: "True story, I've actually used Adobe Express, and I was genuinely impressed with how easy it is to create professional content that you can immediately push up."

Takeaways

• While this mention came from a sponsored segment, the personal, positive review from the host is a bullish signal for Adobe's product strategy.
• It suggests that Adobe is successfully creating user-friendly tools that cater to the growing "creator economy," which could be a significant long-term growth driver for the company.

Investment Theme: Human Capital

• Galloway explicitly states that applying your own human capital against new media is a "good investment."
• This involves building a personal brand and social media footprint on platforms like LinkedIn, Substack, or YouTube.
• The rationale is that barriers to media production have fallen, and a strong online presence has become critical for professional opportunities, influence, and branding. Your social media footprint is now a key factor in how you are evaluated professionally.

Takeaways

• This is a non-financial, personal investment strategy.
• The insight is for individuals to actively create content and build a presence on new media platforms. This can increase career opportunities and personal earning potential, effectively generating a return on the time and effort invested.