Rosenblatt analysts downgraded Alphabet (NASDAQ:GOOGL) to Neutral from Buy, citing several transitional risks that warrant caution.
The investment bank highlighted concerns about the impact of AI on search, suggesting that AI Overviews might reduce search ad revenues. Additionally, there is growing evidence of Alphabet losing search market share to Bing.
The shift of search ad revenue to retail media networks is another concern, with companies like Walmart increasingly adopting strategies similar to Amazon.
Moreover, Amazon’s aggressive push into video advertising, including making ads default on Prime Video and launching a strong upfront sales campaign in May, could pose a threat to YouTube’s ad sales.
The analysts also noted the risk of Alphabet facing higher-than-expected capital expenditure due to competitive pressures in the AI space.