Is Generative AI Friend Or Foe For Google? Analyst Withdraws Bullish Rating

Google parent Alphabet Inc GOOG GOOGL is set to become among the leaders of the fourth industrial revolution, which has already begun.

Although, there is limited upside to the consensus estimates, which call for an acceleration of growth to 11% in 2024, according to UBS.

The Alphabet Analyst: Lloyd Walmsley downgraded the rating for Alphabet from Buy to Neutral, while raising the price target from $123 to $132.

The Alphabet Thesis: The company faces medium-term revenue risk due to new search (SGE) displacing ad inventory with Generative AI responses, which may take time to optimize, Walmsley said in the downgrade note.

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Margin expansion from efficiency efforts “could be offset by a GenAI-driven investment cycle,” he added.

The analyst stated, however, that time is on “Google’s side” with ChatGPT’s slowing traffic growth and limited traction at Bing, “which in turn may let Google throttle its roll-out until it fine tunes monetization.”

While Google can “figure this monetization out” with time, it could be “disruptive over [the] medium term,” Walmsley said.

GOOGL Price Action: Shares of Alphabet were down 0.43% to $122.56 at the time of publishing Monday.

Now Read: 'AI Gold Rush' Triggers Onset Of Tech Bull Market, According To Analyst: '4th Industrial Revolution' Has Begun

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