Is Google and YouTube parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) losing its mojo as a tech titan? That’s a valid question as Microsoft (NASDAQ:MSFT) takes an early and powerful lead in deploying generative/conversational artificial intelligence. Furthermore, GOOG stock might seem like a good value at first glance, but it only deserves a “D” rating as Alphabet continues to cut its staff.
Conversational machine learning is all the rage now, and for legitimate reasons. It’s not just for writing term papers, after all. AI is transforming how people interact with tech gadgets, vehicles, their homes and more.
Alphabet had a chance to take an early lead or at least be among the front-runners in conversational AI. Even in the early innings, however, it looks like Alphabet is falling behind and will have a tough time catching up.
What’s Happening with GOOG Stock?
Speaking of playing catch-up, GOOG stock is still far below its November 2021 peak of around $150. The sellers could stay in control for a while if the buyers can’t bring the Alphabet share price above $100 and keep it there.
Some people might think that there’s a value play here, but be careful. Just because a stock is down, doesn’t necessarily mean it’s a good value. Bear in mind, Alphabet rode to the top as a search engine dominator with Google, but the company’s virtual monopoly could be nearing its end.
And by the way, monopolizing a market has its drawbacks. Alphabet and its stakeholders have learned this the hard way as the company has had to deal with two antitrust suits from the U.S. Department of Justice.
It’s also alarming that Alphabet recently implemented another round of layoffs. This is a sign that the company probably over-hired during the good times and wasn’t prepared for the bad times.
Microsoft Continues to Outpace Alphabet in the AI Race
Microsoft’s $10 billion investment OpenAI and its ChatGPT chatbot technology have made the company a fierce contender in this market. It has also made it very difficult for Alphabet to stay in the race, not to mention win it.
Frankly, Alphabet is off to a poor start when it comes to generative AI tech. Google’s AI event was a notorious flop, prompting financial traders to sell GOOG stock. Plus, Alphabet’s generative AI platform, Bard, became a punchline when it gave an inaccurate answer to a prompt in an advertisement that was supposed to promote Bard.
Microsoft is pulling even further ahead of Alphabet by “rolling out the mobile versions of its A.I.-powered Bing and Edge browser apps,” according to Yahoo! Finance. Thus, the Bing and Edge mobile apps can “serve as your copilot for the web even when you are away from your desktop,” Microsoft Corporate VP and Consumer CMO Yusuf Mehdi said.
What You Can Do Now
Clearly, Microsoft is going to be relentless in developing its generative AI technology. Alphabet can try to compete, but it won’t be easy and would require a great deal of capital and effort.
Moreover, prospective investors should think about the implications of Alphabet’s layoffs. Ultimately, they’re not a positive sign for the company. Therefore, GOOG stock gets a “D” rating. Long-term, it’s not necessarily the end of the road for Alphabet. However, there’s no urgent need for investors to add to their share positions now.
On the date of publication, Louis Navellier had long positions in GOOG and MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Artificial Intelligence, Consumer Discretionary, Retail, E-Commerce, Communications, Media, Streaming, Technology