Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) stock saw another blow as Bernstein analyst Mark Shmulik downgraded his rating from Buy to Hold. He voiced concerns over the company’s aggressive implementation of generative AI into its search results, which he believes could impact short-term ad pricing. He acknowledged his optimism for a recovery in digital ads but expressed that increased competition from retail media, market share that’s shifting back to Meta (NASDAQ:META), and certain pressures from generative AI could stifle near-term search growth.
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The analyst also highlighted that Alphabet’s YouTube platform is getting a smaller piece of a sluggishly growing pie. Despite the abundance of high-quality inventory in the connected TV advertising market, the money transfer has been slow, and the rise of TikTok has intensified competition. He also highlighted an increase in regulatory scrutiny that cannot be overlooked. This downgrade came on the heels of a similar move by UBS the previous day.
Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 27 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average price target of $131.79 per share implies 10.77% upside potential.
