Alphabet faces AI threat to search dominance, but strategic investments show promise

From Nasdaq: 2025-05-22 09:45:00

In the past year, Google parent Alphabet lost two antitrust cases, but the real risk is the rise of AI apps like ChatGPT, which could lead to a 25% drop in search engine usage. Alphabet’s $52.5 billion investment in AI infrastructure shows its commitment to staying ahead in the AI race.

Google’s market share dropped below 90% in Q4 2024, highlighting the threat AI poses to its dominance. However, Alphabet’s strategic investments in AI, like its Tensor Processing Unit, are paying off with increased user engagement and revenue growth in its search business.

Alphabet’s AI efforts extend beyond search to areas like cloud computing and self-driving cars. Google Cloud’s Q1 sales grew 28% year over year, while Waymo is providing over 250,000 passenger rides per week. These successes demonstrate Alphabet’s prowess in leveraging AI across its business segments.

Alphabet’s AI achievements position it as a strong long-term investment, with its stock valuation looking attractive compared to competitors like Meta Platforms and Microsoft. Despite challenges from economic uncertainty and antitrust battles, Alphabet’s focus on AI innovation gives it a competitive edge in the evolving tech landscape.

Considering the potential of Alphabet’s AI investments, it could be a lucrative opportunity for investors. While not included in the top 10 stocks to buy right now, Alphabet’s AI advancements and relatively low valuation make it a compelling choice for those looking for long-term growth in the tech sector.



Read more at Nasdaq: Google Must Win at Artificial Intelligence or Its Search Business Could Crumble. Does This Make Alphabet an AI Stock to Buy?