BofA still a buyer of Google even as it absorbs Microsoft AI search threat
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Google (NASDAQ:GOOG) (NASDAQ:GOOGL) has taken a reputational hit in the past few months as investors process the search threat from artificial intelligence - notably from Microsoft's (NASDAQ:MSFT) push into bringing OpenAI's ChatGPT tech into its Bing search - though BofA reviews the data, and concludes Google's still a Buy with some fundamental AI advantages.
Daily data shows that ChatGPT daily traffic is still on the rise, up 96% month-over-month in February, and search interest in ChatGPT remains high, analyst Justin Post noted.
Meanwhile, mobile downloads of Microsoft's Bing - required this month to get faster access to Bing's PC search - are still elevated since a Feb. 7 announcement, though moderating, he pointed out: Google downloads are currently about 3.3 times those of Bing, up from about 1.2x around the OpenAI announcement but down from about 20x in early February.
"However, the uptick in Bing downloads has not impacted Google download activity, which has been stable in January and February, and we are not aware of any slowing in Google search revenues that could be attributed to the late-2022 ChatGPT launch," Post said.
ChatGPT launched in late November, and Alphabet stock since Dec. 1 is down about 12% vs. a Nasdaq decline of about 1%, Post said. But the company has a "big head start" in artificial intelligence and machine learning, "which will likely drive incremental demand for search and cloud," as well as an improved Google ad platform.
He's maintaining a Buy rating and a GOOGL price target of $125, implying 39% upside. GOOG is up 1.1% early Monday.
Seeking Alpha authors call the stock a Buy on average, while Wall Street analysts think it's a Strong Buy. Seeking Alpha's Quant Ratings consider GOOGL a Hold.