While companies like Nvidia and Palantir have thrived due to AI advancements, Alphabet (Google's parent company) surprisingly sells at a low P/E ratio of 19, making it the cheapest among the "Magnificent Seven" AI stocks. This valuation results from market uncertainty and competition from generative AI platforms like ChatGPT, which have altered user behavior and revenue models for traditional search engines. Consequently, Google's market share has fallen below 90%, signaling significant challenges ahead for its ad-driven business model as it strives to catch up with innovative competitors.
As most investors know, some stocks in artificial intelligence (AI) have stood out for their outsized gains. The recent returns on stocks like Nvidia and Palantir are a testament to the transformative power of that technology.
Unfortunately for Alphabet, generative AI platforms like ChatGPT merely return information often compiled from multiple sites. While some users may still visit the sites from which AI platforms source material, many users never go to the sites, which reduces the ability to sell ads and presumably undermines long-established business models.
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