Alphabet slips as UBS downgrades, citing 'limited upside,' monetization worries
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Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) shares fell nearly 1.5% in pre-market trading on Monday as investment firm UBS downgraded the technology giant, citing "limited upside" and near-term monetization worries. 
Analyst Lloyd Walmsley lowered his rating on Alphabet's (GOOG) (GOOGL) to neutral from buy, stating it is "difficult" to see upside for Google Sites revenue growth, which he predicts will be high-single-digit growth. He also said there is a "medium-term revenue risk" from new search displacing advertising inventory with generative AI responses.
"Our original concerns around the cost of GenAI have moderated, though near-term risk remains and the [company] did increase capex guidance last quarter and flagged a mix skew towards (faster depreciating) technical infrastructure," Walmsley wrote in an investor note. "As such, while we view both the cost and competitive risks as less severe, some element of these risks remain."
Walmsley added he does not see Microsoft's (MSFT) Bing or OpenAI's ChatGPT as "major threats" to Google, given its superior product, but there is some "tail risk" coming from Meta (META), given its AI chat. 
Despite the downgrade, Walmsley raised his per-share price target on Alphabet's (GOOG) (GOOGL) shares to $132 from $123, but noted that the risk-reward is skewed as "balanced."
Analysts are extremely bullish on Alphabet (GOOG). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a STRONG BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates GOOG a STRONG BUY.
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