alphabet(Nasdaq: Goog(Nasdaq: Googl) The stock of a reliable blue chips technology is often considered. Google has a widely used search engine; Android, the largest mobile operating system; Chrome, which dominates the web browser market; And YouTube, the highest broadcast video platform with more than 2.7 billion active users per month. It also provides a wide range of leading productivity and infrastructure services.
Over the past decade, Alphabet shares have gathered nearly 480 % with the expansion of digital ads and cloud companies. From 2014 to 2024, its revenues grew at an annual CAGR growth rate by 18 % with an increase in the arrow’s profitability at a complex annual growth rate of 23 %.
Photo source: Google.
But today, Alphabet’s basic advertising, which achieved 76 % of its revenues in 2024, is facing three existential challenges. First, artificial platforms (AI) such as Chatgpt from Openai change how people search for information. Second, short video platforms like Tiktok’s Tiktok and DeadPlatforms“Rollers withdraw advertisers and viewers away from the long coordination videos in YouTube. Finally, the anti -monopoly organizations in the United States pressure Alphabet to sell Chrome or Android.
Some investors may wonder whether the alphabet is governed by becoming the next IBMWhich has lost computer and institutional programs markets for their competitors over the past four decades. But is this a fair comparison, or is it just a declining exaggeration that ignores the actual differences between the alphabet and IBM?
IBM took control of the personal computing market in the 1980s and early 1990s, but it actually did not have the IP address for any of the ready components in its computers. As a result, other computers made “IBM PC cloning” cheaper with the same devices. IBM tried to distinguish between those cloned animals with their operating system, OS/2, but this effort fluctuates as Microsoft Windows has become the dominant operating system for IBM PC cloning.
These IBM failures forced to back down from the PC market, and finally sold ThinkPad for PC to Lenovo In 2005, it also sold its server business to Lenovo in 2014. This decline shows how the company’s primary growth engine can wither if the trench dries up and failed to keep up with its competitors in NIMBLER.
By the end of the first decade of the twentieth and early 2010 century, IBM was struggling to expand the sections of advanced institutions software and information technology services against competitors -based competitors such as Microsoft and AmazonAnd Google. But instead of strongly investing in new cloud services and converting local programs and services to those -based on the cloud, IBM focused on stripping its weaker units, reducing its costs, and buying more shares to increase its stock.
By the time IBM tried to expand its cloud work by obtaining Softlayer in 2013, it has already fallen behind Microsoft, Amazon and Google. Its wealth did not improve until 2020, when its cloud , Arvind Krishna, took the leadership of its new CEO, ignored the troubles of troubled infrastructure services, and benefited from its acquisition of Redhat (in 2019) to expand its high -growth and AI companies.
Bears expect that the alphabet will face the same fate of IBM as the IBM platforms face more search quotes and reduce the effectiveness of the search engine and targeted ads. Google is trying to catch up with its obstetric intelligence platform, Gemini, but it can still end as OS/2 from the artificial intelligence market if it is lagging behind ChatGPT and Microsoft.
Moreover, Android still an open source operating system can be modified by anyone. This makes it easy for companies like Amazon launching their pessimistic versions from Android (Fire OS) and creating ecosystems that depend on their applications. Google’s cloud platform works are still growing, but it ranks third in the cloud race behind Amazon Web Services (AWS) and Microsoft Azure.
Meanwhile, YouTube – which drives a lot of advertising – does not contain a meaningful trench against Tiktok or rollers. Easy creative creators can easily be their content for these competing platforms, and they are likely to confuse those that give them their greatest advertising revenues. YouTube tries to compensate for this pressure by expanding the scope of subscriptions, but this strategic shift strongly indicates that its advertising business growth will cool over the next few years.
The American Ministry of Justice (Doj) can erode Google defenses by forcing them to sell Chrome, which collects data from its users for its basic advertising works; Android, which closes 2.5 billion users in Google applications with Google.
Like the old IBM, Alphabet tries to compensate for this pressure by trimming the workforce, reducing costs, and buying 11 % of its shares over the past five years. However, its future can remain mysterious if it fails to keep pace with the shift towards artificial intelligence services.
It is tempting to reject the alphabet as the next IBM, but it is still growing much faster than the Big Blue. The expansion efforts were undoubtedly peachings, but they still fruit over the next few years. I was closely watching its recent challenges, but I will not rule out a surprising return as soon as you acted in the end.
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He continues.
*The stock consultant dates back from March 17, 2025
John Maki, former Chole Foods Market, a affiliate company, a member of the Motley Fool Board of Directors. Randy Zuckerberg, former Director of Market Development and Speak for Facebook and Sister to Meta Platforms, Mark Zuckerberg, member of Motley Fool Board of Directors. Susan Fry, CEO of Alphabet, is a member of the Motley Fool Board of Directors. Leo Sun has positions on Amazon and Meta platforms. Motley Fool has positions in Alphabet, Amazon, Machines International, Meta Platforms and Microsoft. Motley Fool recommends the following options: Long January $ 2026 $ 395 on Microsoft and Short January 2026 $ 405 calls on Microsoft. Motley Fool has a disclosure .
Do we witness the conversion of the alphabet into the old IBM? It was originally published by Motley Fool
