AI provides opportunity for Google, despite recent stumbles - Wells Fargo analyst
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Despite a shaky launch earlier this week of its AI chatbot Bard, Wells Fargo analyst Brian Fitzgerald thinks the AI hype cycle has created an opportunity for Google (NASDAQ:GOOG) (NASDAQ:GOOGL), even as the onset of high-profile competition threatens the tech giant's prestige as the leader in the industry.
"The reputational risk is large with Google, they're the market share leader, and, obviously, the Bard rollout was underwhelming, but we think AI hype cycle created an opportunity for Google," the managing director and senior equity research analyst at Wells Fargo Securities told CNBC on Friday.
The Wells Fargo analyst argued that there's room for AI deployment without disrupting Google's core business, including rolling out the technology for "noncommercial, upper funnel, top of funnel queries and searches." He added that Google has a "tech lead in conversational AI" and "any notion that they are playing catch up here" is "naive."
Brian Fitzgerald said he maintains a Buy rating on Google parent Alphabet (GOOG) (GOOGL) with a price target of $150/share.
Alphabet shares fell more than 8% on Wednesday following a stumble at Googleâs AI event, where its new chatbot Bard showed incorrect information.
Meanwhile, the company faces increased competition amid the rising fame of ChatGPT. Microsoft (MSFT), an investor in the product, announced earlier this week that it would launch a new version of its search engine, Bing, integrating the same technology underpinning ChatGPT to compete with Google's search engine.
AI in general has become a key buzzword early in 2023. C3.ai (AI) has more than doubled so far this year, while BigBear.ai (BBAI) has surged more than 500% and SoundHound AI (SOUN) has climbed nearly 190%.
Looking at Friday's stock action: GOOG shares have gained about 6% and MSFT +9.4% so far this year.
Meanwhile, see why Seeking Alpha contributor Verdant Peak Research says, "Google will still be king of search despite many investors now believe that Google's business is under existential threat from the likes of ChatGPT and generative AI technology."
Also read: Could Microsoft eat into Alphabet's dominance within search?