Dominant position facing challenges from SearchGPT? Wedbush supports Google's moat as impregnable, reiterates "outperform" rating against the market

Zhitong
2024.07.30 13:45
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Wedbush analyst Scott Devitt reiterated the "outperform the market" rating for Alphabet and set a target price of $205. He believes that OpenAI's search engine may pose a certain "threat" to Alphabet's stock price, but Alphabet's search moat remains "extremely strong". With over 91% market share in the search engine market, Alphabet has significant advantages such as vast data resources, user base, and computing infrastructure optimized for artificial intelligence. Devitt emphasized that the market has underestimated Alphabet's moat and continuous progress

According to the Zhitong Finance and Economics APP, analysts at Wedbush believe that the search engine launched by OpenAI last week may pose a certain "threat" to the stock price of Google (GOOGL.US) in the short term. Nevertheless, analyst Scott Devitt reiterated the "outperform" rating on Google's stock and set a target price of $205.

Devitt pointed out, "Over the past 12 to 18 months, the potential impact of generative artificial intelligence on the core search business has been a hot topic of market discussion." He mentioned that Google has been working to alleviate concerns in the market about its artificial intelligence search function launched in the United States, which involve query costs, user engagement, and overall user feedback.

According to Statcounter's statistics, Google holds over 91% of the search engine market share. Although OpenAI's SearchGPT is currently only open for testing to 10,000 users and publishers, the potential of this company supported by Microsoft (MSFT.US) should not be underestimated.

OpenAI stated in its official blog post, "We are committed to building a thriving ecosystem for publishers and creators, hoping to help users discover more websites and experiences from publishers, bringing more choices to the search field."

While Devitt acknowledges that SearchGPT may bring some challenges in the short term, he still believes that Google's search moat is "extremely strong." He emphasized, "We believe the market underestimates Google's moat, and the company's continued progress in the search field has not received the attention it deserves."

It is understood that Google's strengths lie in its vast data resources, large user base, computing infrastructure optimized for artificial intelligence, avenues to acquire top engineering talent, and its profitability.

Devitt further pointed out, "We believe that Google's existing infrastructure advantages are underestimated and overlooked by the market. We remain optimistic about Google's ability to optimize the availability, monetization, and cost of generative AI search results."

Despite the novelty brought by OpenAI's search engine to the market, Google, with its deep accumulation and strong advantages in the search field, is still expected to maintain its market leadership position

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