Rosenblatt Analyst Says Long-Term Risks To Google Search Underpin His Caution On Alphabet: Report

• Rosenblatt has a $279 price target on Alphabet, with a ‘Hold’ rating, implying a downside of more than 2% from current levels of $285.65.
• This comes amid Berkshire Hathaway’s disclosure of a $4.34 billion investment in the company’s Class A stock in the third quarter.
• Crockett said that while he appreciates Berkshire’s outgoing CEO, Warren Buffett, as an investment legend, the Oracle of Omaha does not have a 100% success rate when it comes to investments.

Rosenblatt Securities’ Senior Analyst, Barton Crockett, reportedly stated on Monday that the firm’s caution regarding Alphabet Inc.’s (GOOG) (GOOGL) stock is underpinned by the risk to one of the company's core products, Google Search.

During an interview with CNBC, Crockett stated that there are long-term risks to Google Search due to the significant amount of money flowing into OpenAI.

“If you think that OpenAI generates a return on investment, then you have to be concerned what that means for Alphabet, because OpenAI dominates in LLM-driven kind of search,” he said in the interview.

Alphabet’s Class A shares were up more than 4% in Monday’s midday trade. Retail sentiment on Stocktwits around the company trended in the ‘bullish’ territory at the time of writing. Alphabet’s Class A shares hit a new all-time high of $293.95 before giving away some of the gains.

Rosenblatt has a $279 price target on Alphabet, with a ‘Hold’ rating, implying a downside of more than 2% from current levels of $285.65.

Berkshire’s Alpha Bet

Berkshire Hathaway Inc. (BRK-A, BRK-B) disclosed a $4.34 billion investment in Alphabet’s Class A stock in the third quarter (Q3), according to the firm’s 13F filing with the U.S. Securities and Exchange Commission (SEC).

Crockett said that while he appreciates Berkshire’s outgoing CEO, Warren Buffett, as an investment legend, the Oracle of Omaha does not have a 100% success rate when it comes to investments.

“He’s done great with some picks early on, like Apple and others less so, like Paramount and SiriusXM,” he said in the interview.

Brewing OpenAI-Google Rivalry

OpenAI and Google are increasingly competing with each other. While Google’s Gemini competes with OpenAI’s ChatGPT, the latter also has a search feature to take on Google Search. Moreover, OpenAI has also launched a web browser named Atlas, aimed at competing with Google’s Chrome browser.

Crockett also expressed concerns about Alphabet’s valuation and stated that Meta Platforms Inc. (META) offers a relatively cheaper play in this sector.

GOOGL stock is up 51% year-to-date and 66% over the past 12 months.

Also See: Elon Musk Wants To Tell His Own Story About Time In Trump Administration After Walter Isaacson’s Criticism

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