From Nasdaq: 2025-02-14 03:05:00

Investors are questioning Google parent Alphabet’s AI prospects after OpenAI released GPT-4o in 2023. A recent $75 billion commitment to capital expenditures related to AI has spooked investors. Despite this, Alphabet’s focus on AI and vast resources suggest it can still compete effectively in this field.

Alphabet’s dominance in AI has been called into question by analysts after the release of GPT-4o. The company’s revenue, driven by search, YouTube, and Google Cloud, heavily relies on AI. Despite concerns, Alphabet’s low P/E ratio and ability to afford significant investments could lead to future growth and competitiveness.

Alphabet’s recent $75 billion investment in capital expenditures is significant, but necessary to remain competitive in the AI industry. With nearly $96 billion in liquidity and strong free cash flow, Alphabet can sustain this spending for years. Although there is uncertainty, the company is likely to maintain its position in the AI market.

While Alphabet may appear as an underdog in the AI race, it is well-equipped to handle industry disruptions. A pivot towards AI from search may impact ad revenue, but Alphabet’s long-term planning and resources position it favorably. Investors could benefit from Alphabet’s low valuation and potential AI-driven catalysts.

Considerations before investing in Alphabet include Stock Advisor’s recommendations for the top 10 stocks for investors, excluding Alphabet. Despite this, Stock Advisor has historically outperformed the S&P 500 and offers insights for successful investing. Alphabet, alongside Nvidia and Palantir, remains a competitive player in the AI industry.



Read more at Nasdaq: Alphabet Looks Like an AI Underdog, but Here’s Why Its Stock Could Be Worth Buying Now