The European Union has launched an investigation into Alphabet’s (GOOGL) artificial intelligence (AI) models, focusing on potential privacy violations. As AI technology advances, concerns about data collection, user privacy, and the ethical use of personal data have come to the forefront. Alphabet, the parent company of Google, has been actively developing AI models that power its services, such as search algorithms, Google Cloud, and YouTube recommendations.

Market Reaction on this News:

Following news of the EU investigation, Alphabet’s stock saw a decline in market confidence. On the day of the announcement, Alphabet Inc. Class A shares closed at $151.16, representing a weekly loss of 5.29% and a 12.51% decline over the past month. The news added to investor concerns, which were already heightened due to increased regulatory scrutiny over the tech sector globally.

Stock Target Advisor’s Analysis on Alphabet Inc: 

According to Stock Target Advisor, Alphabet Inc. Class A maintains a “Bullish” outlook despite the recent dip. This bullish sentiment is supported by 10 positive signals, such as its high market capitalization, superior risk-adjusted returns, low volatility, and strong return on equity (30.87%). Additionally, Alphabet has exhibited positive free cash flow and earnings growth over the past five years. However, some caution is advised due to the stock being overpriced relative to its peers on several financial metrics, including price-to-earnings and price-to-book ratios. The average target price set by analysts for Alphabet is $196.78, with a 12-month potential upside of around 30.13%.

Conclusion: 

The EU’s probe into Alphabet’s AI models highlights the growing concerns around privacy and the ethical use of AI technologies.  Investors should monitor the situation closely as further developments in the investigation could impact Alphabet’s stock performance and its long-term growth trajectory.