Alphabet is up 32% and Meta 44% so far this year
The Zhitong Finance App learned that according to Loop Capital analyst Rob Sanderson's latest research report, Meta (META.US) is worth buying, and investors should wait and see Google's parent company Alphabet (GOOG.US, GOOGL.US) stocks for a while.
“With the development of artificial intelligence strategies and the introduction of product work, we are increasingly optimistic about Meta's future, while we are still skeptical about Google's future,” Sanderson wrote in a research note on Tuesday. Sanderson rated Meta “buy,” with a target price of $550, and rated Alphabet as “hold,” with a target price of $170.
There's no doubt that generative artificial intelligence has taken the tech sector by storm. Investors are keeping a close eye on which companies are investing in artificial intelligence and what plans these companies are making. The competition for which company can maximize these investments is called an artificial intelligence arms race by some. Meta and Alphabet are among the most watched stocks in terms of AI spending and projects.
Sanderson notes, “Google seems to be busy defending its dominant search position. The share of traditional search queries is being lost to Bing (albeit modest but accelerating), and possibly more attention is being lost to ChatGPT, Perplexity, and other generative AI alternatives.” Google will also face competition from other artificial intelligence search options, including Apple's iPhone's updated Siri, Amazon's Alexa, and MetaAI.
Google has been the king of search engines for years. To maintain this position in a more competitive environment, the company launched Gemini (formerly Bard), its own generative artificial intelligence tool. But Sanderson and some other Wall Streeters are worried that competition will have a negative impact on Google's market share.
With the rise of social media platforms like Snapchat and TikTok, investors are also concerned about Meta's competitive landscape. But Sanderson wrote, “Meta has maintained its dominance and scale in social media for over a decade.”
He said, “Meta has proven itself to be an innovator and an effective fast follower, quickly correcting the direction of product development in the face of competition and changes in market dynamics (such as Stories, Reels, early AI investments). We think the company is better suited and battle-tested to take advantage of disruptive technology and handle major changes.”
As of Wednesday's close, Alphabet and Meta both rose slightly. So far this year, Alphabet is up 32%, while Meta is up 44%.