Alphabet, the parent company of Google, has had a dominant force in the online search market for many years. Recently, however, OpenAI’s ChatGPT has gained adoption which has become a cause for concern among some investors. Alphabet’s stock has seen an 19% increase this year spurred by the rebound in technology stocks, and yet it has had several drops when news of a potential competitor circulated. For example, last Monday the stock dropped 4% when Samsung Electronics suggested to replace Google as its default search engine. Similarly, last February, Alphabet lost 12% on the reveal of Google’s in-house chatbot, Bard, which failed to improve accuracy.
With nearly 85% of the worldwide search market, according to Statista data, there is a lot to lose and only a few companies, such as Microsoft with 8.9% of the search market, stand to gain. To combat the chatbot menace, Alphabet recently consoliadted its artificial intelligence research units into one, in a move to foster progress in AI according to CEO, Sundar Pichai.
Alphabet’s search business alone earned revenue of more than $160 billion last year, which is 57% of total revenue according to Bloomberg data. In contrast, Microsoft’s search advertising only consists of 5.8% of 2022 revenue.
Investors are worried that, with those numbers in sight, Google may have to battle for market share, which could be costly. Despite the uncertainty, most analysts believe Google is well-positioned for the long-run with a low valuation of 18 times estimated earnings, compared to Apple, Amazon and Microsoft.
CEO Sundar Pichai has been with Alphabet since the very beginning, when Google was in its early stages. He has been a driving force behind the success of Google, from developing products and services to leading change initiatives. He notably steered the $12.5 billion purchase of Motorola Mobility Holdings in 2011, and launched an early access platform for mobile developers in 2016. He is continuously steering Google’s reinvention as a tech leader, and impacts the way we interact with technology.
