Alphabet, the parent company of Google, has a history of AI application since 2001, but recent perceptions have shifted. Currently, it holds a low P/E ratio of 19, making it the cheapest stock among its peers in the 'Magnificent Seven.' The rise of generative AI platforms like ChatGPT has posed competitive challenges, particularly affecting Google Search's revenue through advertising. As a result, Alphabet's market share has dipped below 90% for the first time, highlighting a significant change in the AI and search landscape.
As most investors know, some stocks in artificial intelligence (AI) have stood out for their outsized gains. The recent returns on stocks like Nvidia and Palantir are a testament to the transformative power of that technology.
Today, perceptions are much different. It now sells at a P/E ratio of about 19. That makes it the cheapest stock in the 'Magnificent Seven,' and many investors would now consider it a value stock.
Unfortunately for Alphabet, generative AI platforms like ChatGPT merely return information often compiled from multiple sites. While some users may still visit the sites from which AI platforms source material, many users never go to the sites, which reduces the ability to sell ads and presumably undermines long-established business models.
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