If you’re going to invest in a particular market sector, it’s not a bad idea to focus on the leaders and ignore the laggards. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) doesn’t have to have the number-one position in every tech field to be a winner. GOOG stock is still a “monopoly stock” and deserves a “B” grade because it holds a dominant position among U.S. search-engine providers.
This isn’t to suggest that Alphabet and Google are problem-free. As we’ll see in a moment, Google isn’t immune to challenges and the company’s layoffs might worry some investors. There are reasons to consider owning at least a few shares of Alphabet stock this year.
Concerns for GOOG Stock Investors
One area of concern is that Google plans to implement layoffs in 2024. Don’t be too alarmed, however, as Google expects that the layoffs this year will be on a smaller scale than the company’s workforce reductions from 2023.
Besides, Google’s job cuts aren’t just being done randomly. There’s a plan in place here, as CEO Sundar Pichai assured that Google is cutting costs to invest in “our big priorities this year,” such as artificial intelligence (AI).
Another concern is that Alphabet isn’t the top contender in the AI arms race. This is a primary reason why we’re not assigning Alphabet stock a full “A” grade right now. By investing early and aggressively in ChatGPT developer OpenAI, Microsoft (NASDAQ:MSFT) took an early lead over Alphabet in the generative AI field.
To quote Argus analyst Joseph Bonner, “Alphabet remains at minimum competitive if not a leader in the development of generative AI.” That’s a fair assessment, so stay tuned for further developments as Alphabet attempts to play catch-up in the gen-AI field.
Alphabet’s Google Still Holds a Monopoly Position
So, if Alphabet isn’t number-one in gen-AI, can we still call GOOG stock a “monopoly stock”? The answer is yes, as Alphabet doesn’t have to lead every technology niche market.
Alphabet’s Google is still, by a wide margin, the top U.S. search-engine provider. Microsoft’s Bing is a very distant runner-up. In fact, Bloomberg recently reported that Google “has more than 90% of the [search engine] market.”
Not only that, but Bing “ended 2023 with just 3.4% of the global search market.” Enhancing Bing with ChatGPT gen-AI functionalities didn’t seem to move the needle very far.
There hasn’t been an “iPhone moment” for Microsoft in the search-engine category. Therefore, until there’s data to prove otherwise, it looks like Google’s monopoly position is quite secure.
Alphabet Stock: A Monopoly Stock Worth Considering
Even in 2024, Alphabet is still licking its wounds from the company’s notoriously bad rollout of its Bard gen-AI chatbot. Going forward, it remains to be seen whether Alphabet can gain traction against Microsoft in developing gen-AI technology.
Still, Google remains the undisputed heavyweight champion among U.S. search-engine providers. Furthermore, Alphabet’s layoffs are notable but shouldn’t be a deal-breaker for investors. Consequently, GOOG stock earns a “B” grade and should be appropriate for a moderately sized position in a broad variety of portfolios.
On the date of publication, Louis Navellier had a long position in 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.
