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Alphabet’s (NASDAQ:GOOGL) ownership of mistake towards Gemini’s launch is what got Altimeter Capital CEO Bradley Gerstner back into the stock, he said.
In a CNBC interview, the American investor and hedge fund manager said that he feels optimistic about Alphabet (GOOGL) after its leadership admitted that the company needed structural changes as “a whole heap of competition is coming at it.”
With Microsoft’s (MSFT) Copilot, Chat GPT, and other projects in the pipeline and out, Alphabet (GOOGL) needs to “be on their game,” he said.
He said he bought the stock when it was around $90 and sold it last year at around $120, “because, after they announced their intentions with AI, we were frustrated by the slowness of the changes. The company was not making moves to get fit in the way that Meta (META), and others, were.”
The stock currently is up 7.17% year-to-date at $149.7, but down 0.46% from the past five days.
Gerstner added that the launch of Gemini “was a disaster for the company,” with the stock going down to $130, reflecting it.
But that is when Altimeter Capital began adding to their position again, he said, and although he still owns a “smallish position,” he said he believes “the wheels are starting to turn” for Alphabet (GOOGL).
He added that Altimeter Capital research what SGE (the Search Generative Experience) is doing on Google. “If you look at their Generative Search results, compare them to the traditional Search results, what you’ll see is there are a lot more ads showing up on the generative search results.”
This will translate into better monetization, but if competitors do not do the same, customers might gravitate more towards the experience with less ads, that is the risk, he said.