Alphabet may not be the best wat to capitalize on the artificial intelligence wave, according to UBS. The bank downgraded the tech giant to neutral from buy, albeit with a higher $132 per share price target compared to the previous $123 forecast. UBS’ new price target implies roughly 8% upside for Alphabet stock compared to its $122.34 close on Friday. Alphabet shares have gained nearly 39% this year. GOOGL YTD mountain Alphabet stock has added nearly 40% from January. UBS analyst Lloyd Walmsley noted he finds difficulty forecasting more upside for Alphabet, noting revenue headwinds remain in the near-term from new search competition. Walmsley added he also sees “better risk/reward skew in Buy rated [Amazon] and META in our coverage.” “We do not see Bing or ChatGPT as major threats given a superior product at Google. We see some tail risk that Meta’s AI chat could gain traction given the scale of users across its apps but we view this as more speculative,” Walmsley said. Meanwhile, Walmsley said it remains to be seen whether generative artificial intelligence will be a tailwind for the company. “Our bias is to see it as a friend over the long term given that GOOG has substantial first party data and consumer applications that can leverage GenAI,” he said. Walmsley highlighted three risks stemming from generative AI over the medium-term: stiffer competition, pressure to margins and hiccups in monetizing the technology. — CNBC’s Michael Bloom contributed to this report.
