The Alphabet stock has already lost about 12% of its value in 2025, raising concerns among investors about the future of the company in the era of Artificial Intelligence (AI). This development is primarily due to the challenges posed by the rapid rise of generative AI models like ChatGPT. These fundamentally change search behavior: users increasingly prefer direct, AI-generated answers over traditional lists of links, putting pressure on Google’s traditional business model – based on search engine advertising.
Alphabet’s Response to Change
Despite this threat, Alphabet is responding actively and innovatively. At the Google I/O developer conference, new AI features were presented, including an “AI Mode” in Google Search that provides users with contextually relevant and coherent answers. This feature is based on the advanced Gemini-2.5 model and is set to be rolled out globally soon. Furthermore, Alphabet remains profitable and shows growth potential, particularly in Google Cloud, which saw a revenue growth of 28% in the last quarter compared to the previous year.
Challenges and Risks
However, skepticism is also growing among investors due to high investments in AI technologies without immediate clear returns, as well as regulatory risks such as antitrust disputes. Some analysts expect a longer adjustment process for Alphabet to the new technological environment, which could lead to increased stock volatility.
Conclusion for Investors
- The current stock performance (-12%) reflects uncertainties but does not necessarily indicate permanent value destruction.
- Alphabet’s core business faces challenges due to the changing search behavior.
- The company is investing heavily in innovative AI solutions to secure its market position.
- Besides the search business, other areas such as cloud services are growing significantly.
- Regulatory risks and competitive pressure, however, remain.
For investors focused on stable investments, this means: The stock is currently volatile and risky due to the upheaval caused by the AI revolution. However, in the long term, Alphabet could benefit from its innovations – in the short term, there remains a risk of further price losses or “burning money” if investments do not pay off quickly enough or if regulatory issues escalate.
Therefore, those seeking security should closely observe these developments; risk-tolerant investors might see opportunities, while conservative investors should remain cautious.