Global Courant
According to Bernstein, it’s time to move to the sidelines at Alphabet as competition intensifies. The company downgraded the tech giant’s rating to market performance from outperform Monday with a price target of $125 per share, representing an increase of about 6% for the year ahead. The rise of AI has helped Alphabet rise more than 31% from January. However, Bernstein’s downgrade follows a similar move from UBS the day before, which cited similar concerns. GOOGL YTD mountain Alphabet stock has added over 31% this year. “While the headlines are AI-focused, we are seeing increased competition from retail media, a share shift to Meta, and yes, some Gen AI pressure limiting search growth in the near term,” analyst Mark Shmulik wrote. Shmulik added that he thinks Alphabet may be pushing too hard to merge generative artificial intelligence into its core search business. “Google’s aggressive effort to integrate Gen AI into core search results could create an air pocket for search ad pricing in the near term,” he noted. Another issue that could limit Alphabet’s earnings is valuation, the analyst said. “For many investors (and sellers), Google’s stock is like a warm hug,” Shmulik said. Still, Google’s stock seems fairly valued at times, as it does today, with a balanced risk/reward and narrative quickly catching up with the fundamentals, driving Google’s stock up +40% from its lows in November. It’s time to go to the sidelines.” – CNBC’s Michael Bloom contributed to this report.
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