Google stock price has crashed by over 23% from its highest point this year, moving into a bear market. Alphabet has dropped to $158, mirroring the performance of other American technology companies like Amazon, Microsoft, and NVIDIA, which have dropped by double digits. This article explains why core business is facing major headwinds.
AI companies like ChatGPT and Grok are a big risk
Alphabet, the parent company of Google, YouTube, and Android, has long dominated key industries. Its search engine is a near monopoly, with Bing and DuckDuckGo coming a distance behind.
YouTube is the most popular video platform, while Android is used by billions of people globally. Alphabet also has a large market share in the cloud industry, where it competes with the likes of Amazon and Microsoft.
Google Search is its most important service, accounting for billions of dollars in sales annually. It makes its money by selling advertising space on most search queries, providing a win-win situation.
Many companies have attempted to take Google’s market share in the search engine in the past with limited success. Microsoft’s Bing service remains an inferior product with little traction among users.
Recently, however, there have been increased signs that AI chatbots could be a threat to Google in the longer term. While ChatGPT is the biggest player in the industry, the biggest risk comes from Elon Musk’s Grok.
Grok has become one of the fastest players in the AI industry, with its website having over 190 million users in March, a 269% increase from the previous month.
This growth could accelerate because Grok seems like a better platform than ChatGPT or even Google Gemini, especially on real-time data.
Either way, the growth of Grok, ChatGPT, Claude, and DeepSeek means that Google now has a real competitor that may affect its business trajectory.
However, the full disruption of Google Search will take a long time. During this time, it will continue growing its business because of its large market share in the search engine industry.
Read more: Google stock price forecast: Elon Musk’s Grok is a top threat
Alphabet’s business is still growing
In the meantime, Alphabet’s business is still growing, helped by the diversity of its solutions.
The most recent numbers showed that Alphabet made over $96 billion in the fourth quarter, a 12% increase from the same period a year earlier. This growth brought its annual revenue to $350 billion, up from $307 billion a year earlier.
Google is also one of the most profitable companies as its net income surged to over $100 billion. This figure will likely keep growing as some of Alphabet’s top businesses are hard to disrupt.
Google is also aiming to be a big player in other industries, especially the cybersecurity sector. It recently announced a giant deal to acquire Wiz in a $32 billion. That was a notable transaction considering that it turned it away in 2024 when it considered a $20 billion buyout.
Analysts believe that Google stock is highly undervalued. The average estimate for the stock is $207, higher than the current $158. Google also has a price-to-earnings ratio of just 18, much lower than other companies.
Google stock price analysis
The daily chart shows that the Alphabet share price has been in a strong bearish trend in the past few months. It formed a double-top-like pattern at $192, and its neckline was at $148.
Google has also formed a death cross as the 200-day and 50-day moving averages cross each other. A death cross is one of the most bearish signs in the market.
The stock has also dropped below the Ichimoku cloud indicator. Therefore, the stock will likely continue falling as sellers initially target this month’s low of $142.9.
A drop below that level will point to further downside, potentially to $130, its lowest point in March last year. A move above the 200-day moving average at $171 will invalidate the bearish view.
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