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Under the weight of sweeping antitrust enforcement and intense competition for AI turf, Alphabet stock (GOOG, GOOGL) is enjoying a December resurgence. No Big Tech platform has risen so much this late in the year. And aside from Tesla (TSLA), shares of the Google parent are outshining the rest of the Magnificent Seven, rising 14% this month.
Back-to-back catalysts — from a quantum computing breakthrough to the demise of a chief rival in the robotaxi market — lifted shares in the final weeks of 2024. They punctuated a year defined not so much by transformation but by rediscovery.
“The stock market rewards mystery and open-ended opportunities and Alphabet still has its mojo — the recent announcements were a reminder of that,” said Michael Smith, senior portfolio manager at Allspring Global Investments.
By the numbers, even Google’s 40% year-to-date gains fall below the Magnificent Seven average of about 64%. The company’s stock price growth is well behind the chart-topping appreciation of Nvidia (NVDA), Meta’s (META) powerful comeback story, and Tesla’s post-election Trump bump. But the gap between Google’s share price gain and those of the best-performing tech companies is partly why analysts see buying opportunities.
Google’s end-of-year rally also highlights changing perceptions of the company. Where earlier this year Google was still seen as playing catch-up to Microsoft (MSFT) and OpenAI in the burgeoning market for AI tools, Mountain View has since worked to even the playing field.
“People have been worried about the innovator’s dilemma affecting Google’s commitment to staying on the right side of change,” said Smith. “More recently, it is clear that Google has the capabilities to stay at the front of the industry.”
Google’s AI Overviews, the company’s most public-facing AI offering, represented an overhaul of its core search product. And while questions still remain about how well the company can monetize AI-inflected search without cannibalizing its proven business model, CEO Sundar Pichai has said that AI Overviews has led to increased user engagement.
“If we get more confirmation that AI accelerates search growth, that would represent a major change to consensus thinking and lead to more upside for Google shares,” said Smith.
OpenAI might still have a first-mover advantage in generative AI, said Hanna Howard, a portfolio manager at Gabelli Funds. But maintaining that edge over a longer period is challenging as large-scale, well-capitalized players like Google spend meaningfully to develop their own AI capabilities.
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