Wells Fargo analyst Ken Gawrelski has maintained their neutral stance on GOOGL stock, giving a Hold rating on May 6.
Ken Gawrelski has given his Hold rating due to a combination of factors related to Alphabet’s strategic positioning in the evolving AI search market. While Google is expected to aggressively integrate AI capabilities into its main search bar over the next several months, the transition is anticipated to be phased to minimize disruption in the well-established $225 billion search marketing ecosystem. This cautious approach reflects the challenges of shifting consumer and marketer expectations without causing significant upheaval.
Despite Google’s current dominance with a 90% share of the search market, there are signs of market share erosion, as evidenced by a reported slowdown in paid clicks growth. Additionally, the rise of AI competitors like OpenAI’s ChatGPT poses a threat to Google’s future market share, which is projected to decline to 40-50% in the AI search market. These factors, coupled with the current valuation of Google search and the anticipated growth of the overall search market, underpin Gawrelski’s Hold rating, suggesting a balanced outlook between potential risks and opportunities.
According to TipRanks, Gawrelski is a 5-star analyst with an average return of 11.9% and a 66.18% success rate. Gawrelski covers the Communication Services sector, focusing on stocks such as Alphabet Class A, DoorDash, and Meta Platforms.