AI is shaking up online search, challenging Google’s dominance as regulatory hurdles and market shifts intensify. But what if Google transforms the disruption into its greatest leap forward?
The rise of AI-powered tools like ChatGPT is transforming how people consume information online, challenging the traditional browsing model that Google has dominated for decades.
So, is Google’s parent company Alphabet truly at risk of decline, or is it primed to reinvent itself and thrive in the age of AI?
AI and the Crisis of Traditional Browsing
Artificial intelligence is rewriting the rules of online search. Platforms like ChatGPT, enhanced with advanced search features, are enabling users to access information faster—without wading through endless web pages.
The numbers tell the story. In 2023, average time spent on traditional browsers dropped by 12%, while AI-powered search platforms saw an 18% surge in adoption. This shift could signal a pivotal moment for Google, which still commands a staggering 90% share of global searches.
Market Shake-Up: Regulatory and Competitive Pressures
Last week, Alphabet faced a sharp 5% drop in its stock price, pushing shares below $170. The decline was fueled by intensified U.S. government antitrust actions, including potential mandates to sell Chrome and limit data tracking capabilities.
Adding to the regulatory challenges is mounting competition from AI platforms that are attracting a growing share of users, reshaping the global tech landscape in the process.
Strong Fundamentals Amid the Storm
Despite these headwinds, Alphabet continues to showcase robust financial health. Its 2023 earnings per share (EPS) grew by 14% year-over-year, extending a five-year streak of consistent growth.
The company is also pivoting strategically to reduce its reliance on advertising, which currently accounts for 78% of total revenue. Alphabet’s cloud business, now contributing 10% of total revenue, grew by an impressive 35% in the last quarter, underscoring its potential to tap into high-growth markets.
Compared to other tech giants in the “Magnificent Seven,” Alphabet looks like a bargain. Its price-to-earnings (P/E) ratio of 19.4 is far lower than Nvidia (37.7) or Tesla (106.4).
Investing in AI: A Strategic Shift
Alphabet isn’t sitting idly by as AI reshapes the tech world. It’s positioning itself as a leader, leveraging assets like Google Brain and DeepMind. Recent moves include acquiring Character.ai for $2.7 billion, further bolstering its AI capabilities.
The company’s subscription service, Google One, with over 100 million subscribers, has also integrated advanced AI features into its premium $20/month plan. This places it in direct competition with ChatGPT, which currently has about 10 million premium subscribers.
Looking ahead, Alphabet plans to reinvest heavily in AI. By 2025, the company is expected to generate $154 billion in operating cash flow, with $59 billion earmarked for AI-focused R&D.
Technical Analysis and Market Outlook
From a technical perspective, Alphabet’s stock is hovering around a critical support level near $170. Despite recent declines, GOOG shares have regained ground, buoyed by broader market strength from the S&P500 index.
The stock remains resilient, with potential upside of 5% to its next relative high of $180 and 10% to its all-time high of $190. The 14-period RSI is holding steady at a neutral 50, a level where the stock has historically shown positive reactions.
As demand dynamics unfold, Alphabet’s stock presents an intriguing opportunity for investors watching the interplay between technical signals and market momentum in the weeks ahead.
Original article published on Money.it Italy 2024-12-11 17:06:00. Original title: L’AI può essere la fine di Google?
