It’s Alphabet (GOOGL) going up against Microsoft (MSFT) in the field of artificial intelligence — and after decades of owning the search engine, Google finds itself in a position to shrug off its role. Although Club owns both stocks, we are most concerned about Alphabet at the moment as it is catching up in the AI arms race and facing a government antitrust lawsuit over the dominate its online advertising. Last week was brutal for Alphabet stock. Last Tuesday, Microsoft revealed surprise plans for an AI-enhanced version of its Bing search engine, which has barely any market share. In response, a day later, Google hosted its own AI event — showcasing Bard, their answer to ChatGPT. It was a failure. Last Wednesday and Thursday’s consecutive declines in Alphabet stock were the largest two-day losing streak since March 2020. Wall Street’s criticism of GOOGL last week reflects our worries that if a New Bing – powered by Microsoft-backed OpenAI. , maker of viral ChatGPT — has gained a foothold in search, Alphabet’s online advertising dominance may be at stake. The Justice Department lawsuit could also shake up the advertising market. Alphabet’s business model relies on revenue from online advertising. The company posted full-year 2022 revenue of $282.84 billion — 79% of which came from Google’s ad line items, according to the company’s latest 10-K filing with the Securities and Exchange Commission. pandemic. “I question Alphabet’s business model right now,” Jim Cramer said last week. “They have to do something fast.” GOOGL MSFT 3M mountain Alphabet (GOOGL) vs Microsoft (MSFT) 3-Month Performance Alphabet’s stock has fallen more than 9.5% in the past week, losing $135 billion in market value, according to FactSet, which ended last week. with a market cap of $1.21 trillion. By comparison, Microsoft stock performed better for the week. To be fair, tech stocks in general have had a hard time closing Friday’s trading session in general recently after starting a boom in 2023. On Monday, however, tech stocks were higher. , with Microsoft up more than 3.5%. The alphabet on either side remains unchanged. In a research note on Friday, Jefferies called the steep drop in Alphabet stock “excessive”. While Bard was reviewing reports of an inaccurate description in a promotional video, Jefferies analysts wrote: “There are many examples of ChatGPT generating inaccurate or misleading responses. .” Jefferies’ note is based on insights from a discussion with an artificial intelligence expert who previously served as product lead at Google AI. “The quality of big AI models is highly dependent on data quality,” argues Jefferies analysts, and Google search has a huge lead thanks to its use of Search, Chrome, and Android. Jefferies has reiterated its buy rating on GOOGL, with a price target of $130 for the stock, closing Friday below $95 a share. The ongoing overhang for Alphabet from the DOJ’s antitrust lawsuit is troubling and confusing. “It’s tough when you have the Justice Department saying you have a monopoly and when you have a monopoly being destroyed by Microsoft at the same time,” said Jim. Published late last month, the DOJ’s lawsuit accuses Google of “anti-competitive behavior” in the digital advertising market. Eight states have also signed off on an antitrust lawsuit against Alphabet, which is calling for the company to divest from its ad technology business. Evercore ISI said in a recent research note that this ongoing regulatory battle with the government “brings only modest underlying risks such as” higher administrative costs, management distraction and the possibility that the advertising market may hesitate. Price target is $120 per share. Google responded to the DOJ’s lawsuit in a blog post, claiming it was “one of hundreds of companies that allow advertising on the internet. And it’s clear that competition is increasing as the day goes on. more and more companies join and invest in building their investment businesses.” advertising, and the growing possibility that Bing’s improved capabilities could lure at least some users away from Google search. Jim also called the DOJ’s antitrust ad lawsuit “brutal”. He added that it’s been an “embarrassing three weeks” for Alphabet, including a sharp drop a day after it reported weaker-than-expected fourth-quarter results on Feb. 2. The market for AI-powered chatbots The offering is still in its early days, which is why we wouldn’t be surprised if other players join the AI race.” Jim said, “Meta has something huge,” referring to the fact. The club holds the Meta Platform (META), although he did not provide further details.lphabet may find it more difficult to incorporate advertising on its platforms.We do not act on developments. The long-term Jim Cramer Charitable Trusts are GOOGL, MSFT, META. See here for a full list of stocks.) A Club subscriber. invest by CNBC with Jim Cramer, you will receive a trade alert before Jim makes a trade.Jim wait 45 minutes after sending a trade alert before buying or selling stocks in his portfolio. of its charity. If Jim had talked about a stock on CNBC, he would have waited 72 hours after issuing a trading warning before taking a trade. INFORMATION ABOUT THE ABOVE INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, PLUS OUR DISCLAIMER. NO PROCEDURE RESPONSIBILITIES OR OBLIGATIONS ARE existent, OR GENERAL, BECAUSE OF YOUR RECEIVING OF ANY INFORMATION PROVIDED IN RELATED TO THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS GUARANTEED.
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Its Alphabet (GOOGL) vs Microsoft (MSFT) in the field of artificial intelligence — and after decades of owning the search engine, Google finds itself looking over its shoulder. Although the Club owns both stocks, we are most concerned about Alphabet at the moment as it is catching up in the AI arms race and facing a government antitrust lawsuit over dominance. its online advertising.
