5 Best Stocks to Buy for an 18 Year Old

3. Alphabet Inc. (NASDAQ:GOOG)

Market Capitalization as of 2/15: $1.24 trillion

Alphabet Inc. (NASDAQ:GOOG) shares have fallen 28.23% in the last year but are up 9.43% year to date as the market weighs on how the new AI powered Bing will affect the search giant’s earnings in the future. While AI makes mistakes, Bing could gain market share from Google and also potentially increase costs. Nevertheless, Alphabet Inc. (NASDAQ:GOOG) has leading AI technology of its own that could help it grow its earnings in the long term. As it stands, Alphabet Inc. (NASDAQ:GOOG) is the riskiest company in this list given the competition but the tech giant also has substantial potential.

L1 Capital International Fund commented on Alphabet Inc. (NASDAQ:GOOG) in a Q3 2022 investor letter,

Two companies, Amazon.com (Amazon) and Alphabet Inc. (NASDAQ:GOOG), detracted more than 0.5% (in AUD) from the Fund’s returns. Both companies reported Q3 2022 quarterly results that were modestly below our expectations. Alphabet’s share price was impacted by concerns that macroeconomic pressures will impact advertising spend, increased commentary that Alphabet’s core search business could be disrupted by open artificial intelligence technologies, particularly from OpenAI’s ChatGPT chatbot (Microsoft is rumoured to be investing $10 billion in OpenAI with the aim of incorporating the technology into Bing, Word and email). Alphabet’s growth in employee numbers is also expected to pressure profitability in a more subdued economic environment.

We have allowed for a softening in advertising in our base case expectations and believe Alphabet’s management will be under increasing pressure to take action to manage its cost base, as many other technology businesses have already done, including Amazon. Disruption to search remains an issue to monitor. However, we consider Alphabet to be at the forefront of developments in artificial intelligence and well placed to defend its core franchise.