"With November arriving, many investors are starting to position their portfolios to anticipate what 2026 could bring. One growing area of concern is that there may be a bubble forming in the AI realm. However, that's mostly confined to companies providing computing equipment to companies like OpenAI that can't pay for it with cash. Others like Alphabet , Amazon , and Meta Platforms are still positioned to excel."
"Alphabet is the parent company of Google, but it also has several other successful brands under its umbrella. At its core, Alphabet is an advertising business, with about three-fourths of revenue coming from advertising among its various platforms. Currently, it's a great time to be in this industry, although advertising is affected heavily by economic sentiment, so that's not always the case."
"What investors forgot is that most users don't need a full-blown generative AI experience, and Google looks like it hit the nail on the head with how it integrated AI Search Overview into a Google result. By placing a short, generative-AI-powered summary at the top of the result, users can get all of the generative AI they need. If they want to dig deeper, Alphabet also has a leading generative AI model they can use in Gemini."
Many investors are positioning portfolios for 2026 and worry about a potential AI bubble. The bubble risk is concentrated among companies that sell computing equipment to cash-constrained AI developers. Alphabet, Amazon, and Meta Platforms derive most of their revenue from non-AI businesses and remain positioned to perform well. Alphabet generates roughly three-fourths of revenue from advertising across multiple platforms, a sector sensitive to economic sentiment. Google Search has incorporated an AI Search Overview that provides concise generative summaries while offering deeper interactions via the Gemini model. Alphabet was let off easy in an antitrust case related to Google Search.
Read at The Motley Fool
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