I’ve been a skeptic on Alphabet (NASDAQ:GOOGL) for some time now. Clearly, others have disagreed. Amid a strong market this year, Alphabet stock has roared higher, gaining over 15%. Another 7% gain will move GOOGL stock back to all-time highs near $1,300.

My long-running concern, as I wrote back in 2017, is Alphabet’s heavy reliance on advertising. The company’s forays into hardware have had mixed success, to put it mildly. The Waymo self-driving car unit is an intriguing business, but even valuations as high as $175 billion suggest it only accounts for roughly 20% of Alphabet’s market capitalization. Meanwhile, I’ve long thought that autonomous driving supporters are far too optimistic — and that a wider rollout of the technology is decades, not years, away.

Through its investment arm, Alphabet does hold stakes in many companies, including newly public Lyft (NASDAQ:LYFT), Care.com (NASDAQ:CRCM), and many others. But its total portfolio is worth only a few billion dollars; again, not enough to move the needle when it comes to Alphabet stock.

At the end of the day, this remains a business based on advertising, which generated 88% of 2018 revenue, according to the 10-K. And that’s a significant risk. The steady move toward apps and away from browsers can potentially impact search usage — and thus Google revenue. Mobile advertising simply isn’t as profitable. So far, investors have been willing to take on those risks but longer-term, the ad business might not be what GOOGL stock bulls believe.

Now, a new competitor is rising. And that presents another material risk to Alphabet stock.

Along Comes Amazon

For the last few years, Alphabet’s Google unit has had essentially one major competitor in online advertising: Facebook (NASDAQ:FB). One report attributed 99% of online advertising growth in 2016 solely to those two companies. Research firm eMarketer estimated that last year, Google and Facebook combined held 60% of the market, with Google’s share at 38.2% and Facebook at 21.8%.

That’s changing. Amazon (NASDAQ:AMZN) finally is turning to advertising to drive revenue. Its impressive growth on that front is coming, at least in part, at the expense of Google. Just last week, the Wall Street Journal detailed how many key advertisers — and their ad agencies — are shifting their digital budgets in Amazon’s direction. As a result, Amazon is expected to pass Microsoft (NASDAQ:MSFT) for second place in search ad revenue.

The WSJ isn’t alone in sounding the alarm. eMarketer estimates that Google will lose a full point of market share this year. In February, Forbes cited a survey by marketing agency Nanigans that also showed companies shifting ad spend to Amazon.

Amazon’s direct relationship with customers and its importance for so many e-commerce businesses makes it a natural fit for advertising — and perhaps a better fit than even Google. It seems clear at this point that the retail behemoth has the potential to take share from Google for some time to come.

No Reason to Panic… Right?

All that said, there’s obviously no need to panic just yet when it comes to Alphabet stock. Google might lose market share to Amazon but the market still is growing. Estimates suggest at least double-digit growth for the market as a whole this year. Amazon’s reach — and its private label ambitions — also make it a competitor to many of its potential advertisers. As such, at least a few companies would rather advertise on the more ‘neutral’ Google platform.

Even the eMarketer estimates suggest that Amazon’s market share will come in at less than 9% in 2019. Facebook has its own issues. And so, admittedly, it’s far too early to predict that Google’s advertising growth will come to a screeching halt. And with GOOGL stock still looking rather cheap, particularly backing out its cash, some investors might see Amazon as a minor inconvenience and not a real threat.

The Questions Facing GOOGL Stock

To be sure, Alphabet does look cheap. The stock trades at nearly 26x 2019 EPS estimates but backing out its nearly $150 per share in net cash, the multiple drops down closer to 22x. Against something like 20% underlying growth — Alphabet’s ‘adjusted’ earnings last year were $38 per share — that multiple seems at worst reasonable and at best hugely attractive.

Still, there are risks to advertising growth here which, in turn, means risk to GOOGL stock. The overall market is benefiting from a secular shift away from TV and radio. Google and Facebook largely have had the market to themselves. Google’s reliance on search, in particular, leaves it vulnerable to customer changes. And steady rises in traffic acquisitions costs can pressure margins.

Given those risks, Amazon’s rise does matter to Alphabet stock. Because Alphabet earnings are based almost solely on advertising profits. If Amazon takes even some of those profits, growth begins to slow. If it takes share, and search, in particular, starts to slow, Google’s earnings are going to disappoint. And, at least for the moment, in that scenario Alphabet has nowhere else to turn for growth.

As of this writing, Vince Martin has no positions in any securities mentioned.