Amid the regulatory challenges faced by tech giants, Alphabet (NASDAQ: GOOGL) has found itself entangled, echoing a common theme in the tech landscape. In this dynamic environment, two juggernauts, Microsoft (NASDAQ: MSFT) and Alphabet, have been engaged in a fierce rivalry in recent years. While Alphabet contends with regulatory hurdles, the competition with Microsoft takes an interesting turn.
Microsoft’s search engine, Bing, has encountered stiff challenges from Google Search, and now, in a new twist, Microsoft’s CEO stands resolute against Alphabet in its legal battle with the U.S. Government.
Is this a roadblock for Alphabet’s long-term growth?
The U.S. Department of Justice conducted an antitrust trial last month, claiming Alphabet has monopolized Google Search as the default search engine.
Picks for you
On October 2, Microsoft CEO Satya Nadella testified as the Government’s witness in the ongoing antitrust trial. He believes Alphabet’s unethical business practices have hampered Bing’s growth as a search engine. He claims that the internet is truly the “Google web,” and believes that Alphabet’s monopoly will allow it to easily dominate the artificial intelligence (AI) niche.
The trial could last up to ten weeks. Investors should keep a close eye on the potential impact the trial could have on Alphabet’s business and stock. Google handles 90% of all search queries worldwide. Yet, it is now already facing the challenge of incorporating AI into its products to compete with Microsoft’s AI-powered Bing.
Despite the testimony, GOOGL stock closed 2.5% higher on October 2 at $135.17. The stock has gained 52% year-to-date, compared to a 12% gain in the broader market index.
In 2022, Google Search accounted for 57% of Alphabet’s total revenue. However, Google services such as YouTube, Gmail, Google Play, Google Maps, and the cloud also generate revenue for the company. Its revenue and profits are growing every year. Analysts predict that Alphabet’s revenue will reach $320 billion in 2024, up 13% from 2022.
Analysts see long-term upside
At the end of the second quarter of 2023, Alphabet had $26 billion in cash and cash equivalents and $13 billion in long-term debt. The company is financially sound to advance in the AI niche.
Wall Street is bullish about the stock’s long-term prospects. Alphabet is rated a “Strong Buy” by TipRanks, with an average target price of $147.43, implying a 9% upside potential over the next 12 months.
The company’s strong ongoing fundamentals and opportunities in the expanding AI industry make it a long-term growth stock to invest in.
Buy stocks now with Interactive Brokers – the most advanced investment platform
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
