Alphabet Inc (NASDAQ:GOOGL) is among the cheapest of the Magnificent Seven right now, losing 7% in the past two weeks. Here is all the scoop on the tech stock:
Things started to look bleak for Google’s parent company after a judge said that Google had used exclusive deals to monopolize the search market illegally. In 2023, a top company executive testified during the Justice Department’s antitrust trial that Google paid $26.3 billion to other companies to ensure its search engine was the default on web browsers and mobile phones.
On these grounds, the U.S. Department of Justice filed a document that suggested a breakup of the technology giant’s Google search business, including selling its Chrome browser. It prohibits the ownership and control of anything that creates a preference for Google. The proposals, even though not a definitive plan, aim to reduce Google’s dominance in the search market, leading to investor concerns about potential operational disruptions and future profitability. The company will submit its own list of proposed fixes in December. The company will submit its own list of proposed fixes in December.
A portfolio manager analyzing a line graph displaying stock performance of the company.
Analysts note how the original lawsuit was filed under the first Trump administration. Trump hasn’t been a fan of Google, having recently said search results were biased against him. However, his current stance on Google is unclear. Meanwhile, the news about the search monopoly came in when investors were already worried about the rise of generative artificial intelligence.
These genAI technologies have created an opening for competitors like ChatGPT, Perplexity, and Microsoft, making it easy to imagine a future where traditional search has faded and consumers are communicating with their devices via an AI-generated custom interface. The increased competition has raised concerns about Google’s ability to maintain its market share and advertising revenue in the evolving technological landscape.
Another recently concluded case against Google by the Department of Justice is where Google was accused of illegally dominating online advertising technology markets. During closing arguments, DOJ lawyers argued Google monopolized markets for publisher ad servers, ad networks, and ad exchanges, effectively “rigging the rules” to maintain dominance. Alphabet’s shares rose 1.4% during the proceedings. The company may have had the antitrust pullback, but financial analysts have expressed optimism about Alphabet’s future, citing its robust AI capabilities and diversified revenue streams. Company fundamentals look strong, and now with AI summaries, Google Search is also expected to demonstrate continued growth.
While we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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