Wed, Sep 3, 2025|Whitney Tilson

Updates on Alphabet, Adobe, Constellation Brands, Cracker Barrel, and QMMM

1) On July 24, I pounded the table on Google, YouTube, and Waymo parent Alphabet (GOOGL) after its latest earnings report. I concluded that:

It makes no sense that one of the greatest businesses of all time trades at a lower multiple than the average large U.S. business.

In addition, Alphabet boasts the lowest [price-to-earnings] multiple among its peer mega-cap tech stocks...

It was a good call, as the stock is up 16% since then, with half of that gain today thanks to some positive news for the company. As covered by this Wall Street Journal article, Alphabet dodged the worst penalties in its antitrust case:

Google avoided harsh antitrust penalties for its conduct in the U.S. search market, with a judge barring the company from entering into exclusive deals but rejecting a forced spinoff of its Chrome browser and other sweeping remedies sought by the Justice Department.

U.S. District Judge Amit P. Mehta in a Tuesday ruling said Google can't pay to be the exclusive search engine on devices and browsers, but he allowed the company to continue making payments for distribution of its products, saying a prohibition on those agreements would harm recipients such as Apple.

As the article continues, the judge's earlier ruling was that Google had an illegal search-market monopoly for more than a decade. But as it turns out, AI had a part to play in the judge's new opinion:

Mehta said a judge's job was to approach remedies with humility, and he said the competitive dynamics of the marketplace were changing already, largely because of AI technology...

Google in a statement said the decision "recognizes how much the industry has changed through the advent of AI" and underscores its position that "competition is intense and people can easily choose the services they want."

Google's AI development is yet another reason I'm bullish on Alphabet, as highlighted in this post from the author of the Capitalist Letters newsletter on social platform X:

My view today is the same as it has been for more than six years... I continue to think Alphabet is a great stock for conservative, long-term-oriented investors.

In his own report earlier this month, longtime software analyst Brent Thill of Jefferies cited the "meaningful complexity" across current business software workflows that AI cannot yet replace. "In our view, the intricacies of enterprise architecture make full AI disintermediation of software unlikely," he wrote.

One of my favorite tech stocks, Adobe (ADBE), makes exactly this kind of complex software. I've written about the stock several times, and my team and I recommended it to Stansberry's Investment Advisory subscribers on April 3.

(Subscribers can read our full report here. And if you're not already subscribed and wish to do so, click here.)

In the issue, we detail how Adobe is embracing AI and integrating it into its products. So it may help rather than hurt Adobe's business:

It's embedding generative AI into all its apps with an initiative called Firefly. It's a family of products that enable users to generate images, text effects, and even video content through simple text directions.

The aim is to have something that matches its peers like OpenAI's new GPT-4o image generator, Midjourney, and Sora, but right there in the app.

I continue to like ADBE, which is roughly flat since we recommended it.

3) On Friday, I gave an update on French wine and spirits maker Pernod Ricard (RI.PA). Among the many reasons I cited for not being tempted by the stock is this recent Gallup poll. It shows that the percentage of Americans who drink is at an all-time low – and those who drink are drinking less.

This trend (among other factors) appears to be impacting spirits giant Constellation Brands (STZ) as well...

The company slashed its outlook for the year due to widespread consumer weakness, especially among its core demographic, as reported by the WSJ. This news sent its stock down 6.6% yesterday to a five and a half year low:

The Rochester, N.Y.-based importer of Modelo and Corona beers said Tuesday that a challenging macroeconomic backdrop is leading shoppers to cut back on high-end beer as they make fewer trips and tighten their spending.

Chief Executive Bill Newlands said these trends are particularly evident among Hispanic consumers, a group that executives earlier this year noted was pulling back amid fears of immigration crackdowns.

As I covered on February 19, Berkshire Hathaway (BRK-B) bought the stock in the fourth quarter of 2024. I'm glad my team and I stayed away, as STZ has lost around 40% of its value since the beginning of the fourth quarter.

At some point, the stock will be worth bottom-fishing. But it feels too early right now.

4) Last Wednesday, I took a first look at restaurant chain Cracker Barrel Old Country Store (CBRL) after its recent logo drama. I'm glad to see my old friend and famed short seller Jim Chanos agrees with me that the stock is "an easy pass"...

In a recent X post, he notes that highway sit-down restaurants have been hurt by rising competition:

5) Kudos to Edwin Dorsey of The Bear Cave newsletter who has been doing research on – and warning investors about – Chinese pump-and-dump stock frauds.

His latest report covers QMMM (QMMM), which is up 10 times since mid-April. It now trades at 185 times revenues. The full post is for paid subscribers only, but here is a short excerpt:

The Bear Cave believes the stock of QMMM Holdings (NASDAQ: QMMM – $296 million) is being manipulated by overseas stock manipulation groups and is at risk of a near-term, severe stock collapse...

StopNasdaqChinaFraud.com, The Bear Cave's crowdsourced database of WhatsApp stock manipulation groups, has nine submissions of WhatsApp chats promoting QMMM starting as early as August 3. Likewise, VampireStocks, a Reddit community dedicated to exposing U.S.-listed China stock manipulation scams, has issued several recent warnings on QMMM.

Another stock to avoid at all costs!

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.