Apollo economist warns: AI bubble now bigger than 1990s tech mania
On Wednesday, Wells Fargo reiterated its Equal Weight rating on Alphabet stock (NASDAQ:GOOGL) with a price target of $175.00. Currently trading at $163.98, InvestingPro analysis indicates that Alphabet is trading below its Fair Value, with analysts maintaining targets ranging from $160 to $240 per share. The firm’s analysis recognized Alphabet’s broader rollout of AI Mode as a positive development, but emphasized the need for deeper integration within the core search function to effectively compete with other AI search tools. Alphabet announced that AI Mode is exiting Beta and will be available to all U.S. users starting today, with plans to incrementally incorporate features from AI Mode into the main search experience. As a prominent player in the Interactive Media & Services industry with a market capitalization of $2 trillion and robust revenue growth of 13.07%, Alphabet maintains a strong position to invest in AI development.
The research firm anticipates that Alphabet will embed AI Mode into its core search within the next three to six months. Wells Fargo suggested that Alphabet’s potential to integrate personalization features into AI Mode and Gemini could provide a competitive edge. Alphabet’s extensive personalized data, derived from widely-used applications such as YouTube, Maps, Gmail, Calendar, and its traditional search, could be unmatched by competitors if leveraged properly while respecting user privacy.
Wells Fargo analysts noted that the key to success in the AI agent market would be the provision of relevant consumer information. They also pointed out the increasing risks of disintermediation for platforms that depend heavily on search traffic. With the accelerated adoption of AI Mode, websites that rely on search referrals, such as Reddit, might be significantly affected.
Moreover, as Google enhances the agent-like capabilities of its Search and Gemini services, platforms with commoditized supply that depend on search marketing, including Online Travel Agencies (OTAs), could find themselves at a disadvantage. Wells Fargo’s commentary reflects a cautious but observant stance on Alphabet’s strategic moves in the evolving landscape of AI-powered search technologies. With an excellent financial health score and strong profitability metrics according to InvestingPro, which offers 10+ additional exclusive insights about Alphabet’s AI positioning and financial outlook in its comprehensive Pro Research Report, the company appears well-positioned to navigate this technological transition.
In other recent news, Alphabet Inc. has garnered attention following its annual Google I/O conference, which showcased significant advancements in artificial intelligence (AI) and product innovation. The company introduced AI Mode in Google Search and highlighted the capabilities of its Gemini model, which has been integrated with other AI products like Astra and Mariner. Analysts from Citi, JPMorgan, and KeyBanc have maintained positive ratings on Alphabet, with price targets set between $195 and $200, reflecting confidence in the company’s AI strategy and product cadence. KeyBanc emphasized the importance of Alphabet’s Gemini 2.5 and its potential to drive new monetization opportunities. Meanwhile, JMP Securities and Citizens JMP have maintained a Market Perform rating, noting concerns about ongoing U.S. search antitrust trials and competition in the search domain. Despite these challenges, Alphabet’s efforts to integrate AI into its core products and services have been recognized as a strategic move to enhance digital experiences and reduce online friction. The company’s advancements, including real-time translation and media creation tools, are expected to revolutionize media consumption and user engagement.
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