Alphabet, the parent company of Google, is experiencing a significant shift in valuation amidst evolving AI landscapes, particularly due to competition from platforms like ChatGPT. With a P/E ratio of around 19, Alphabet is now considered a value stock within the 'Magnificent Seven.' Historically a leader in AI since 2001, Alphabet's responses to emergent technologies are perceived as lagging, particularly as ChatGPT undermines traditional advertising revenue models. The decline in Google Search's market share below 90% raises concerns about future advertising revenue, which constitutes 74% of Alphabet's income as of early 2025.
Despite its history of innovation and AI application, Alphabet faces uncertainty and competitive pressure from generative AI platforms like ChatGPT, impacting its valuations.
Alphabet, once a top AI stock, now has a P/E ratio of about 19, making it the cheapest among the "Magnificent Seven," classified as a value stock.
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