Alphabet stock hit with Rosenblatt downgrade

Rosenblatt Securities has downgraded Alphabet's (GOOG, GOOGL) stock to Neutral from Buy and trimmed its price target. The firm cites transitional risks and increasing competition as key factors in its decision.

Catalysts hosts Seana Smith and Madison Mills break down the details.

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This post was written by Angel Smith

Video Transcript

Alphabet getting a downgrade today, Rosenblatt cutting its rating to neutral that's down from by trimming its price target by a buck there.

We're looking at a loss of just about 2/10 of a percent.

Now, the firm citing transitional risks in multiple areas that could impact a search ad revenue.

So we're seeing a bit of a reaction there in the South analyst Bar.

Uh Crockett also going on to say that he sees multiple areas of transitional risk that recommend stepping back for a little while to see how the company handles it when he talks about those areas of risk.

He says that it also includes A I impact on search, what exactly that is going to look like.

And also from a competition standpoint, the competition could really push a alphabet into a higher than anticipated Capex spending cycle here for A I Mattie.

Yeah, it's interesting to one other line that sticks out the transitioning of search ad revenue to retail media network seems set to accelerate as other retailers like a Walmart follow Amazon's lead and push into this area.

So potentially see some ad revenue pushing to the downside for a name like alphabet.

But this is very interesting.

I remember speaking with an analyst for a piece I worked on recently on the series side about the fact that Google is not always going to be the best search engine for folks.

And with a I, you can say something like I am looking for the most affordable but best lasting coat available on the market and it will give you that exact product for that.

That's something that's a lot harder to find a platform like Google.

And that's why we've seen the rise in social media influencing when it comes to products like that because you can get a lot more specific.

And I think that this note highlights a lot of that idea as well.

The idea that A I is potentially going to be a better search engine than something like Google is able to provide for consumers right now.