Alphabet Inc. (XNAS-GOOGL) Google’s parent company, is under pressure as generative AI tools reshape how users interact with search. In 2025, its stock declined 5%, while competitors like ChatGPT and Perplexity offer direct answers, disrupting Google’s traditional link based model. In response, Google introduced AI Overviews conversational summaries now used by over 1.5 billion monthly users. The long-term impact on search ad revenue remains uncertain. Analyst Michael Nathanson argues that market fears may already be priced in, and Google is actively accelerating AI integration to close the competitive gap.
Alphabet’s cloud division reported a 28% revenue increase in Q1, with growth expected to rise as more AI server infrastructure ramps up. A key development includes OpenAI’s decision to run workloads on Google’s TPU accelerators, signaling confidence in Alphabet’s AI infrastructure. The $32 billion acquisition of cybersecurity firm Wiz also strengthens its cloud positioning against Amazon and Microsoft.
However, Alphabet faces serious antitrust challenges. Federal judges have ruled the company used monopolistic practices in search and advertising, especially through its billion-dollar deals with Apple. Remedies, expected in August, could involve the divestiture of Chrome or changes to its business model. Meanwhile, Waymo Alphabet’s autonomous driving subsidiary continues expanding. It now handles over 250,000 paid robotaxi rides weekly, and has announced plans to enter more U.S. cities including Atlanta, Austin, and Miami. A partnership with Toyota hints at future innovation in personal autonomous vehicles.
Alphabet’s valuation reached a ten-year low of 19 times forward earnings. Despite regulatory and competitive headwinds, its investments in AI, cloud services, and autonomous technologies offer long-term potential. Investors may view the current dip as a buying opportunity though caution remains warranted.