“So to me, it’s hard to imagine a positive scenario, it just seems like we’re discussing degrees of negativity. Or Google matches functionality and its costs go up and margins decline. “For the impact on Google the scenarios seem to be Bing gains share and Google loses share. It shows there’s real product-market fit, real demand. “ChatGPT has attracted 100 million users in two months, it’s extraordinary. Google and search in particular has historically been this great business, near monopoly, very high margins,” says Tom Rice, the Perpetual Global Innovation Share Fund portfolio manager. “It’s the first major risk Google’s faced as a company, certainly the biggest.

In 2022, when sentiment around Facebook-owner Meta collapsed, the stock traded as low as 9 times forecast earnings per share, which means a sentiment swing on Bing could cut Alphabet stock in half from here. But at $US96.94 a share it has derated from around 26 times to 19 times analysts’ consensus for earnings of $US5.16 per share in 2023.

Rhett Wymanįor investors, Alphabet’s unstoppable rise has seen its shares advance nine-fold since 2009 and 34-fold since its 2004 float. Thomas Rice of Perpetual says Alphabet’s earnings multiple could derate if Bing steals market share. So, is Google-owner Alphabet a sell as artificial intelligence (AI) based challengers like Bing steal market share from the incumbent and erode its profit margins? We asked six of Australia’s leading equities managers whether talk of Google’s decline is waffle, or an opportune time to sell the stock. The future of search and Alphabet shares as a one-way ticket to a blue-chip retirement is under scrutiny for the first time, as Google’s dominance is challenged by ChatGPT and Microsoft’s search engine Bing.

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