Top 10 AI Stocks on Investors’ Radar These Days

4. Alphabet Inc (NASDAQ:GOOG)

Number of Hedge Fund Investors: 160

Alphabet Inc (NASDAQ:GOOG) is under pressure after two reports. One, OpenAI is reportedly mulling developing a search engine to compete with Google. Two, DoJ plans to seek divestiture of Google Chrome, which is perhaps the crown jewel of Alphabet Inc (NASDAQ:GOOG)’s search business.

Chrome is just a browser. It does not bring any revenue on its own. So why is it so important? Chrome drives Alphabet Inc (NASDAQ:GOOG)’s revenue by sending traffic to its default search engine, which generates income through ads. In Q3 2024, Google Search brought in $49.4B, making up 56% of the company’s total revenue for the quarter. Chrome also helps Alphabet Inc (NASDAQ:GOOG) gather browsing data, improve search relevance, and refine ad targeting, which attracts more advertisers willing to pay for prime ad space. It’s crucial for maintaining Alphabet Inc (NASDAQ:GOOG)’s search dominance, holding around 89% of global search traffic and 50% of the US browser market.  Chrome also acts as a gateway to other Alphabet Inc (NASDAQ:GOOG) services like Gmail, YouTube, and Google accounts, boosting user engagement. Removing the seamless integration could hurt users.

However, Alphabet Inc (NASDAQ:GOOG) bulls believe the stock is a buy on the current weakness and call the latest worries around Chrome an overreaction. They believe DoJ will use the Chrome divestiture threat as leverage to push Alphabet Inc (NASDAQ:GOOG) into agreeing to less severe actions, like ending exclusive contracts with device makers such as Apple and Samsung, or opening Chrome to third-party search engines, giving users more choice.

Columbia Seligman Global Technology Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q3 2024 investor letter:

“Alphabet Inc. (NASDAQ:GOOG) shares moved lower during the quarter, as the company was a victim of the rotation out of the technology sector and artificial intelligence-focused companies. In August, a federal judge ruled that Google had violated antitrust laws by engaging in unfair business tactics to dominate the Internet search advertising market. The central aspect of the government’s case against Alphabet was that the company’s $20 billion in annual payments to Apple made Google the default search engine on iPhones. Our team remains bullish on Alphabet’s overall business model.”