By Angela Palumbo
Alphabet’s Google Search faces competitive risks from other generative artificial intelligence players, but one Wedbush analyst says investor concern is exaggerated.
Scott Devitt moved Alphabet to the Wedbush Best Ideas List and increased the stock’s price target to $175 from $160.
Google has been the number one search engine for decades. The concern among investors is that its dominance might be affected by the introduction of generative AI search engines such as ChatGPT — which offer an alternative, in-depth option.
However, Devitt wrote in a research note Friday that he believes “the perceived structural risks to Google Search are overstated” and he continues “to view Alphabet as a net beneficiary of generative AI.”
To compete with other AI companies — such as Microsoft’s Bing, which uses OpenAI’s GPT software — Alphabet introduced its Gemini suite of generative AI tools to the standard Google search engine.
“Alphabet’s competitive advantages are multifaceted, the company has an unmatched breadth of data to develop and train AI models across text, images, and video, a massive user base spanning Google Search, YouTube, Android, and other Google applications, AI-optimized compute infrastructure supported by custom silicon (TPUs), access to leading engineering talent, and a proven track record of effective monetization, ” Devitt noted.
Shares of Alphabet were up 0.4% in premarket trading Friday to $148.17. Coming into the session, the stock has gained 5.7% this year.
Write to Angela Palumbo at angela.palumbo@dowjones.com