Gene Munster Says AI Risk Is 'Still On The Table' For Google Despite Blowout Q2 Earnings, But Admits Search Was 'Strong' For Alphabet: 'Investors Will Likely Come Back'
Gene Munster, a tech analyst, stated that despite Alphabet Inc.'s strong Q2 earnings, the risk from AI remains significant. He noted that while Google Search performed well, generating $54.19 billion in revenue, the company must adapt to the evolving AI landscape to maintain its dominance. Munster expressed that investors are likely to return to Google stock in the coming months, despite concerns over potential disruptions from AI and antitrust issues. Alphabet's Q2 revenue reached $96.43 billion, surpassing expectations, with shares rising in after-hours trading.
Alphabet Inc. GOOG GOOGL may have delivered a blowout second quarter, but longtime tech analyst Gene Munster says its future still hinges on how it navigates the AI revolution.
What Happened: On Wednesday, Munster, managing partner at Deepwater Asset Management, took to X, formerly Twitter, following the earnings call.
"GOOG call is wrapped up. Message from management: Search is rock solid, and AI is working with new revenue opportunities down the road," he wrote.
Munster, who had been bearish on Google stock over concerns that AI could disrupt its dominance, added, "That risk is still on the table, but Search was so strong that investors will likely come back to the stock over the next few months."
Why It's Important: Alphabet reported second-quarter revenue of $96.43 billion and earnings of $2.31 per share, beating analyst expectations of $93.72 billion and $2.16, respectively.
Google Search brought in $54.19 billion in revenue, up from $48.51 billion year-over-year.
In April, during the tech giant's first-quarter earnings, Munster compared Google's crossroads to eBay's failure to adapt, warning that if the search giant doesn't evolve its results page and business model fast enough, it could face long-term stagnation—even amid short-term success.
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Later in May, Munster warned that Alphabet's dominance in search is under threat due to an antitrust lawsuit and the rapid rise of generative AI, particularly OpenAI's ChatGPT.
He likened Google’s situation to Redbox's slow disruption and eventual decline, stressing that Google must quickly adapt and build a product users want while still being able to monetize it effectively.
Price Action: In after-hours trading, Alphabet Inc.’s Class A shares climbed 1.82% to $193.70, while Class C shares advanced 1.72% to $194.80, per Benzinga Pro data.
Benzinga's Edge Stock Rankings indicate that GOOG continues to show strong upward momentum over the short, medium and long term.
