Purchase decision: Alphabet - Google
The battle for dominance in the new market.
For all those who have not read my first post, again very briefly about me. I'm 15 years old, so I can't trade on the stock market on my own yet. Why then Buy decision? My father has a depot (no, that is not yet deposited here) for me, which I get on my 18th birthday. In the meantime I am allowed to make decisions myself within a certain framework. Last was the $GOOGL.
***I would also be very happy about suggestions. This is only my second post, so there will definitely be room for improvement. So please let me know!***
Short overview
Buying Alphabet stock hasn't been a recent plan of mine. Google is an incredibly strong company. They offer a wide range of services. Google as a search engine has almost 85% market share. In addition, there is the huge business with advertising, which brought Google 200 billion dollars in revenue last year. Other revenues brought the group an additional 57 billion last year. In the process, Google made a profit of 76 billion US dollars. However, we must not forget the (unfortunately) ever-shrinking advertising business. The company lost almost 5% market share in recent years, which brings it to 27.5%. At the moment, the arrow is pointing downwards. The biggest competitor is currently Meta. They came to a market share of just under 23% in 2020. The trend is upward.
When and at what price did I buy?
I bought on Thursday (February 09), shortly before the close of the market at a price of 88.60€. Since then Alphabet has leveled off a bit, today they fell again a bit. But I am aiming for a long-term investment (5-10 years).
Why do I believe in the company?
Even if the figures look impressive, this is definitely not an indicator for the future in the particularly highly competitive advertising market. The dominance of the search engine could also dwindle. Especially if Microsoft with Bing slowly starts to expand their services with ChatGPT. They definitely intend to do so. The last press conference showed that impressively. Only a few days after the 15 billion dollar mega investment in OpenAI, they already announced the innovations. Google has pressure. With each passing day, Bing is gaining market share. This results in decreasing user numbers and correspondingly decreasing advertising revenues. In addition, share prices are falling. Investors' expectations are high, and financiers are putting on the pressure. Recently, however, Google has not lived up to this pressure. The last press conference was a stock market disaster. I doubt very much that there is anyone who did not notice this, but I would like to explain the situation briefly. Google had announced their extensive AI package to the public. It was supposed to start with Bart, the answer to ChatGPT. This only half worked out. On the question which discoveries the JWST (James Webb telescope) had made, the system answered with a wrong statement. It would have taken the first pictures of a planet outside the solar system. An expensive ignorance. Google promptly lost $100 billion in stock market value.
If Sundar Pichai was not aware of it until now, now it is clear to him in any case that his company must deliver. In the next few weeks, Google will focus everything on making its AI market-ready and available to the general public. We must not forget that even ChatGPT still makes mistakes, and not too few of them. I strongly expect Bart to be much stronger. It should be able to access current information on the Internet. Also the output of sources should be possible. Google had much more data to train such a complex AI.
The competition for dominance in this fairly new market will be crucial for the future of both companies. Not only chatbots but also better (Google already uses this) AI based solutions for advertising and other corporate clients.
Conclusion
Alphabet has good chances to prevail in the long run. The current battle for dominance in the AI market will show this. If Google does not deliver properly in the next few months, it could cost important users and thus money.
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Sources:
https://de.statista.com/outlook/dmo/digitalewerbung/suchmaschinenwerbung/deutschland
https://finanzwissen.de/aktien/tech/alphabet/
All information is of course without guarantee. No investment advice or recommendation.