Melius cited "the only reason for investor concern." It's the rise of Google

Investors in the artificial intelligence sector have "the only real reason to worry" about the rapid strengthening of Alphabet, Google's holding company, in this segment. This was warned by Melius analyst Ben Reitzes, he was quoted by MarketWatch. The vertical integration of Google's parent company, relying on its own AI processors and network infrastructure, makes it a serious threat to other chip and cloud vendors.

Google's parent company has made an "AI coup" and now some investors are "numb with fear that Alphabet will win the AI war" thanks to the growing popularity of its Gemini chatbot and its own processors designed specifically to work with neural networks, Reitzes wrote. If Google takes over the market, it would "hurt a number of stocks" in its coverage circle, the analyst argued. He urged clients to "prepare for volatility," MarketWatch reports.

Alphabet's success in building its own chips makes it less likely that the company will continue to rely on products from Nvidia, AMD and Arista Networks in the long term, says Reitzes. Google is also pulling its AI workloads with Gemini - and that's hitting Microsoft, Amazon and Oracle, he argues. The performance of the latest version of the Gemini 3 chatbot in complex tasks makes the analyst question the prospects for Adobe's AI tools, whose shares he advises selling. The growing popularity of Gemini may force even Meta, one of the most aggressive players in the AI market, to give up, the expert added.

Despite Google's strengthening position, major cloud providers have already raised their capital expenditure forecasts and could collectively spend up to $500 billion in 2026, Reitzes noted. The analyst recommended buying shares of Apple, IBM and Cisco Systems as defensive securities that can withstand volatility in the AI sector.

Salesforce CEO Marc Benioff wrote on social network X late last week that after using Google's latest Gemini 3, he no longer wants to go back to ChatGPT.

"Wow," Benioff wrote. - I used ChatGPT every day for three years. Just spent two hours with Gemini 3. There's no going back. The leap is incredible - logic, speed, images, video... everything is clearer and faster. It feels like the world has changed again."

In November, shares of Alphabet - so far the best dynamics among the securities of the "Magnificent Seven" and can for the first time in history become the leader in the group by annual growth, according to MarketWatch. On November 25 at the premarket in New York quotes of the parent company Google jumped more than 4%, creating a margin for growth for the third consecutive session, notes Bloomberg.

According to FactSet, Wall Street's sentiment towards Alphabet is becoming increasingly optimistic: over the past three months, the number of Buy and Overweight recommendations has grown from 57 to 63, while the camp of doubters (Hold) has shrunk. The picture was spoiled by the appearance of a sell signal (Underweight) - a month earlier there were no pessimists among experts at all.

Despite the consensus recommendation "buy" (Buy rating), analysts do not expect Alphabet's securities to grow rapidly: the average target price of $325.6 per paper is only 2% above the closing level of trading on November 24.

This article was AI-translated and verified by a human editor