Gene Munster, managing partner of Deepwater Asset Management, believes that breaking up Alphabet Inc. (Google) could unlock significant value for the company. On Wednesday, Munster shared his thoughts on CNBC’s ‘Fast Money’, suggesting that a separation could boost the company’s value by as much as 20%.
Munster outlined his vision for the breakup, stating that the most likely scenario would involve separating Google’s ad network, which he describes as the “ugly piece” of the business. Despite contributing 11% of the company’s revenue, this segment has been declining and is widely considered a prime target for regulators seeking to break up Google’s dominance.
He also highlighted the importance of Google’s Gemini AI technology, suggesting that it would likely be paired with the search business, which currently holds over half of Google’s value. Munster believes that a breakup could reignite urgency and spark innovation within different business segments, potentially revitalizing the company’s culture.
While Munster acknowledges that the probability of Google voluntarily breaking up is “exceptionally low,” the potential benefits of such a move have drawn attention from analysts and investors. The Department of Justice’s (DOJ) ongoing investigation into Google’s dominance in the search market has further fueled discussions about a possible breakup.
Jefferies analyst Brent Thill echoed Munster’s sentiment, suggesting that a breakup or business separation could be beneficial for shareholders, stating that “the sum of the parts is greater than the whole.” However, Wedbush’s Dan Ives believes that a complete breakup of major tech companies is highly unlikely, suggesting instead that we may see “business model tweaks and heavier scrutiny of M&A.”
As of this writing, Alphabet’s Class A and Class C shares are trading slightly down at $159.75 and $161.48 respectively. While the idea of a Google breakup remains a topic of debate, the potential implications for the company’s value and future direction continue to be of great interest to investors and industry experts alike.
