Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are the second-, third-, and fourth-largest companies on the U.S. markets today. These tech giants have their niches, but they all compete in one massive industry: cloud computing.Each co
Amazon (NASDAQ: AMZN) has been one of the best stocks over the past decade, turning every $10,000 invested into nearly $80,000. And before the stock's decline in 2022, that investment was worth nearly $150,000.So what happened? Well, investors got worried about Amazon's over-expa
I used to know some guys who met before the beginning of each college football season. They would predict how their respective teams' seasons would likely go.
Lots of investors can boast of a great year, and there are some who have done well in consecutive years. But if you look at long-term track records, you'll be hard-pressed to find anyone who has outperformed Warren Buffett.
U.S. stocks that took a beating last year are surging in the early weeks of 2023, leading markets higher. Some investors believe that trend is unlikely to last.
The metaverse may feel far off, but investors may want to pay close attention to what some of the world's leading technology companies are doing in this space. That's because the metaverse will be worth an estimated $679 billion by 2030.
Understandably, investors would be more confident in Amazon's (NASDAQ: AMZN) stock if Jeff Bezos was back at the helm. The company faces difficult challenges the founder may be better equipped to resolve.
On November 30, 2022, ChatGPT took the world by storm.
Built by San Francisco-based OpenAI, a
Microsoft (
NASDAQ:MSFT
)-backed startup, ChatGPT has attracted Internet users looking for straight answers to their questions -- rather than a series of suggested links. It's delighted students, too, who've used the new AI chatbot to turn a one-line prompt into an original 2,500-word term paper. And… it's lit a fire under Microsoft rival
Alphabet (
NASDAQ:GOOG
), which is now under pressure to come up with an alternative product or risk becoming irrelevant.
On Wednesday, Google announced version 1.0 of its response, a chatbot of its own named "Bard." The initial demo didn't go well, however, with Bard responding to an inquiry by (wrongly) asserting that the James Webb Space Telescope was the first telescope to photograph a planet outside of our solar system (In fact, a Chilean telescope was first).
Oops.
More than just an embarrassment, that mistake seems to have sparked a selloff in Alphabet stock, as investors absorbed the implication that Alphabet -- believed to be a leader in AI -- is subject to the same limitations that others have pointed out in ChatGPT.
Can Alphabet recover from its fumble, though? This is the question that Goldman Sachs analyst Eric Sheridan tackled in a wide-ranging note covering Alphabet's various artificial intelligence and machine learning initiatives.
The "AI arms race," argues Sheridan, will be "the dominant investing theme" among tech stocks for at least the next few months as Microsoft and Alphabet -- and
Amazon (
NASDAQ:AMZN
),
Meta (
NASDAQ:FB
),
Apple (
NASDAQ:AAPL
),
Baidu (
NASDAQ:BIDU
), and
Alibaba (
NYSE:BABA
), too -- all vie for supremacy in this space, and throw "tens of billions of dollars" into the effort to build increasingly better AI mousetraps. Which company will emerge victorious -- Sheridan doesn't even try to guess, admitting it's simply too "difficult to forecast." But one thing the analyst does think certain:
Whoever wins, and regardless of whether the winner is single, or whether multiple platforms end up with a piece of the AI market, the cost of this effort will take a toll on Alphabet in the short term.
Proceeding from an estimate that Alphabet has already spent anywhere from $27 billion to $137 billion on AI research to date, and guessing at what it might have to spend to keep up with the AI arms race in future years, Sheridan warns that investors can expect Alphabet's gross profit margin to shrink by somewhere between 60 basis points and 230 basis points over the next couple years.
True, Alphabet regularly rakes in gross profit margins of 55% and up today, so even a full two percentage-point decline will hardly kill the business. But it might hurt. Additionally, there's the risk to market share -- and the revenues those gross margins are applied to. As Microsoft has observed, it's currently really a runner-up in internet search, so all Microsoft really has to do with its Bing-ChatGPT partnership is add a few customers and steal a few points of market share from Google -- and it will come out of this a winner.
As the dominant player in search and search advertising, however, Alphabet must run simply to stay in place. This makes AI less of an opportunity for Alphabet, and more of a costly necessity. For this reason, it's curious that after outlining all the risks,
Overall, however, Sheridan comes to the conclusion that Alphabet stock is a "buy" and worth 31% more than it costs today -- $124.60 a share. (See Sheridan's track record,
click here)
Alphabet is that rare beast - a stock with plenty of coverage where everyone is in agreement. It has garnered 32 analyst reviews over the past 3 months – all Buys – naturally making the consensus view here a Strong Buy. The average target currently stands at $129.34, implying the shares will deliver returns of ~37% over the one-year timeframe. (See
GOOGL stock forecast
)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’
Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer
: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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A $5,000 investment can make you richer. Don't believe me? Consider this: If you had invested $5,000 in Advanced Micro Devices in 2013, it would have grown to over $300,000 less than a decade later.
Wall Street closed sharply lower in a choppy session on Thursday, dragged down by mega-cap tech stocks. Treasury yields rose after an auction of 30-year bonds saw weak demand. All three major indexes ended in the red.
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Last year was tough for investors, as the market experienced its worst annual decline since 2008. For many younger investors, 2022 was their first taste of economic uncertainty -- and it's been a difficult ride.
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North American companies struggling to hire workers in the tightest labor market in decades brought on more robots last year than ever before, with many earmarked for new electric vehicle and battery factories under construction.
We all hope our favorite stocks will crush the market this year. But what's actually more important is their performance over time -- by this, I mean a period of at least five years. The good news is it's much easier to choose these sorts of players than those that will deliver a
After rebounding over 20% to start 2023, Amazon (NASDAQ: AMZN) stock sold off following mixed results from its fourth-quarter earnings report. The company beat analysts' estimates on revenue, but profits came in below expectations.