Alphabet slips as Bernstein downgrades, citing 40% run since November
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Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) shares received their second downgrade in as many days after investment firm Bernstein cut its rating on the tech giant, citing the 40% run in the stock since November 2022.
Analyst Mark Shmulik lowered his rating on Alphabet (GOOG) (GOOGL) shares to market perform from outperform, noting that he is "optimistic" on the digital ad recovery. Despite that, Shmulik said the company has perhaps been "too aggressive" in rolling out generative AI into its core search results, which "could create a near-term air pocket on search ad pricing."
"While the headlines are AI-focused, we see increasing competition from retail media, share-shift back to Meta, and yes, some Gen AI pressure capping near-term search growth," Shmulik wrote in an investor note.
Alphabet (GOOG) (GOOGL) shares slipped around 1.5% in early trading on Tuesday.
On Monday, UBS downgraded Alphabet's (GOOG) (GOOGL) shares, citing "limited upside" and near-term monetization worries.
Shmulik also pointed out that YouTube is seeing a "shrinking slice" in a slow-growing pie as the connected TV advertising market is "flooded" with quality inventory, but dollars are slow to come across, along with the increasing presence of TikTok.
The analyst also noted that there may be too much regulatory activity to ignore.
Analysts are extremely bullish on Alphabet (GOOG). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates GOOG a STRONG BUY.
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