In 2025, Alphabet Inc. has faced a challenging stock performance, declining 18% year-to-date amid increasing AI competition and stringent regulatory concerns that affect its primary revenue source, advertising. Recent analysis from Guggenheim's Michael Morris highlights a notable pullback in advertising spending, especially in brand advertising and general internet demand, due to economic uncertainties. While this trend is alarming, YouTube's overall strength remains intact, with the platform recently overtaking Disney in viewership. Additionally, Google Cloud is growing rapidly, leveraging its AI capabilities, although there is still a noted supply constraint in broader cloud demand.
Alphabet's stock has dropped 18% in 2025, primarily due to fierce AI competition and ongoing regulatory scrutiny affecting its ad-dependent revenue model.
Advertiser feedback indicates a spending pullback since March, with brand advertising and internet demand particularly soft as economic uncertainty looms.
Despite slight adjustments to forecast, Morris notes YouTube's inherent strength as it has become the most-watched platform, surpassing Disney in February.
Google Cloud is outperforming its competition, led by strong demand for AI infrastructure, yet broader cloud demand remains supply constrained.
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