This article first appeared on our US website.
Despite a strong day in the broader US market, shares of Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) were trading about 2.8% lower at 12:59 PM ET today, although they recovered somewhat in the afternoon. As of 3:30 PM ET, Alphabet shares were down 1.8% for the day.
The move came after ChatGPT’s parent company, OpenAI, teased the launch of its artificial intelligence (AI)-based web browser, ChatGPT Atlas.
A threat to search dominance
Earlier today, OpenAI on X posted a very short video teasing the new web browser, and CNBC reported that it will be available to the general public soon.
Investors are increasingly concerned about the launch of AI-powered browsers and search engines when it comes to Alphabet, which has long dominated the search sector. In fact, more than half of Alphabet’s revenue comes from searches, so if these AI-powered browsers can grab market share, Google and Alphabet could certainly be in trouble.
Google has responded by creating its AI-powered overviews on top of searches powered by Gemini. The company has also rolled out AI mode, which appears to be similar to ChatGPT in that users can ask follow-up questions, like with a conversational AI chatbot. For the most part, analysts are impressed with the engagement between users and Google’s AI-powered overviews.
The company owns many strong businesses
AI-powered browsers certainly pose a threat to Google’s search business, but this is a company with near-infinite resources that should be able to respond, as evidenced by the success of AI Overviews.
Alphabet also owns many spectacular companies with strong growth prospects, including Waymo, YouTube, Google Cloud, a chip company and a quantum project. The stock trades at around 25 times forward earnings and is still a buy in my opinion.
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