We’re downgrading our rating on one tech stock in the portfolio whose AI initiatives may be lagging its competitors and increasing the price target on another that is gaining market share. Alphabet (GOOGL) : Alphabet shares are slipping about 3% Monday afternoon after The New York Times reported Samsung is considering switching Google with Microsoft’s Bing as the default search engine on its devices. Keep in mind that this could all be one big negotiation tactic on Samsung’s end. According to the report, the deal between Samsung and Google is up for renewal soon and is estimated to be worth about $3 billion of revenue to Google. Why is Alphabet shedding about $50 billion of market cap today on a story about a revenue stream that brings in about $3 billion per year? It is confirmation that competition in the search industry is heating up, especially with more and more people interested in using AI chatbots. To be clear, we don’t expect Alphabet’s stronghold on the search industry — and its more than 90% share of the industry, according to StatCounter — to go away any time soon. Google search has become too ingrained in today’s society. However, when you dominate such a large percentage of something, even a few-percentage-point loss can make a difference. That’s what we are worried about. Further adding complexity to this story is Alphabet’s current antitrust case with the Department of Justice . Given the mounting uncertainties facing the tech giant, it is only prudent to downgrade our rating to a 2 from a 1. This means we would rather be buyers on a pullback until we get more clarity into how the company will improve its AI positioning. And with GOOGL shares outperforming the broader market this year with its 19% gain, we would lighten up on our big position and sell some stock if we weren’t restricted. Palo Alto Networks (PANW): Shares of this leader in cybersecurity are brushing up against our initial price target of $200. From the time of our February…
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