Analyst Highlights Threats to Alphabet (GOOG) Search Business, Draws Kodak Comparison

We recently published a list of 10 Stocks Everyone’s Talking About as Trump Softens His Tone on China. In this article, we are going to take a look at where Alphabet Inc (NASDAQ:GOOG)stands against other stocks everyone’s talking about as Trump softens his tone on China.

Investors are desperately looking for signs of a market bottom after going through massive volatility and losses. 3Fourteen Research’s Warren Pies said in a latest program on CNBC that we are getting “close” to a market bottom based on his technical analysis. The analyst talked about key indicators he’s looking for:

“I do think that the White House is trying to deescalate the situation. One of the markers we’ve seen is that Peter Navarro hasn’t been on TV since April 13th, and that’s corresponding with this equity rally. Setting that aside, though, I think that a bottom, a confirmed bottom, has two components. You need to see washed out sentiment and positioning. We measured that in a number of ways: we measured it in inverse ETFs for retail, we measured it for vault targeting for institutions, and CTAs for trend followers. Across all those metrics, sentiment is depressed. That’s phase one of a bottom. Then, you look for technical confirmation. Philosophically, we’re always going to be late because of that ordering.”

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For this article, we picked 10 stocks investors are currently focusing on. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Alphabet Inc (NASDAQ:GOOG)

Number of Hedge Funds Investors: 160

Ben Reitzes, Melius Research head of technology research, said in a latest interview with CNBC that Alphabet Inc (NASDAQ:GOOG) search business is under threat from other companies and it “does not matter” how many models the company releases to keep up with the competition. The analyst brought up Kodak to highlight a possible outcome for Google.

“I mean, it’s confusing. It’s very cluttered. Make a bet. There—I don’t know one other than analysts and investors who can name every model and every product that Google’s experimenting with.What has happened time and again in this market is there’s disruptors who make a bet—this is the way things are going to go—and they move faster. It’s actually not always the best product. It’s not always the best model. Actually, the best model belongs to Google. It’s called Gemini 2.5 Pro. It is the best. We said it in our note. You know, Kodak had the best digital cameras too. Every six months, they’d come out with one that topped Canon. It didn’t matter. It’s—you got to make a bet and disrupt yourself.”

Burke Wealth Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:

Alphabet: We parted ways with long-term holding Alphabet during the fourth quarter. We’ve owned Alphabet since the inception of the Focused Growth strategy so obviously, the company has many positive attributes that we admire. That remains the case. We have long contended that Google search is the best business in the world. However, developments over the past couple of years on the competitive front (generative AI search) and the regulatory/legal front have put the sustainability of Google’s search monopoly at legitimate risk for the first time since Microsoft launched Bing in 2009. We cut our weighting in Google in half last year as we wanted to take some time to better assess the threat of generative AI driven search to its business model. To be fair, this emerging threat has been something more akin to a gathering storm than a tornado. Capital continues to flow into the space both from start-ups and the Microsoft/Open AI collaboration. Thus far, this has not resulted in a material erosion of market share but it is certainly something requiring continued monitoring….” (Click here to read the full text)

Overall, GOOG ranks 5th on our list of best mid cap growth stocks. While we acknowledge the potential of GOOG, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GOOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.