Key Research Findings for Alphabet, IBM, and Merck
Zacks Research Daily Highlights: The report features research on 16 major stocks, including Alphabet, IBM, and Merck, along with micro-cap stocks SandRidge Energy and NeurAxis, emphasizing unique insights into smaller companies.
Alphabet's Performance: Alphabet's shares have outperformed the industry, driven by growth in Google Cloud and advancements in AI, despite ongoing litigation requiring data sharing with rivals.
IBM's Growth Strategy: IBM is focusing on its Watsonx platform and hybrid cloud solutions, but faces challenges from declining consulting sales and macroeconomic pressures.
Merck's Sales Dynamics: Merck's sales are bolstered by its Keytruda drug, despite facing competitive pressures and challenges in the Chinese market, while also pursuing M&A to enhance its pipeline.
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- Proposal Withdrawal: New York Governor Kathy Hochul's withdrawal of a proposal to allow robotaxis to operate in the state has abruptly halted Waymo's plans, indicating a lack of governmental support for autonomous driving technology.
- Legal Restrictions Remain: The proposal aimed to repeal the law requiring drivers to keep one hand on the wheel, but due to insufficient legislative backing, this law remains in effect, sidelining Waymo's driverless vehicles from legal operation.
- Testing Permit Intact: Waymo's current permit to test eight autonomous vehicles in a 13-square-mile area of Manhattan and Brooklyn remains valid until March 31, 2026, providing limited opportunities for future operations despite the setback.
- Market Reaction: Although the news briefly weighed on Alphabet's stock price, it subsequently recovered and climbed back into positive territory, reflecting ongoing market confidence in Waymo's potential future developments in New York.
- Significant Investment Returns: Bill Ackman's investment in Hilton Hotels, initiated in 2018, has shown remarkable growth, with Hilton's stock up 12.8% year-to-date in 2026 and 22% over the last 52 weeks, indicating strong market performance.
- Increased Share Value: As of the fourth quarter, Ackman, through Pershing Square Capital, owned 3,028,664 shares of Hilton, with a current valuation of $942,701,956.64, reflecting an increase of $72,718,222.64 since the end of the fourth quarter, showcasing robust investment growth.
- Comparison with Tech Stocks: While the Magnificent Seven stocks have generally declined in 2026, Hilton's performance stands out, highlighting its significance in Ackman's portfolio, especially as Meta and Amazon saw declines of 0.8% and 9.5%, respectively.
- Future Growth Potential: Hilton started 2026 on a strong note, closing at $287.25 at the end of last year, up from $248.56 in January 2025, suggesting it may continue to drive overall portfolio gains in the coming months.
Software and Services Stocks Resilience: Contrary to expectations, software and services stocks are not facing demise due to the rise of artificial intelligence.
AI's Impact on the Market: The introduction of AI technologies has not negatively impacted the performance of these stocks as previously feared.
Best Trade in 2026: The most profitable investment strategy in 2026 has been to buy semiconductor stocks while selling software companies.
Performance of Semiconductor Stocks: The iShares Semiconductor ETF has increased by 19% in 2026, following a 40% gain in 2025.
Struggles of Software Companies: In contrast, software companies have faced significant losses, with the iShares Expanded Tech-Software Sector ETF down 22% this year.
Quarterly Decline: The software sector also experienced an 8% decline in the fourth quarter of the previous year.
- Core Reasoning Enhancement: Google has significantly improved core reasoning capabilities in its latest Gemini 3.1 Pro, achieving a verified score of 77.1% on the ARC-AGI-2 benchmark, which is more than double the performance of 3 Pro, indicating substantial progress in complex problem-solving.
- Developer Availability: The new model is now accessible to developers via the Gemini API in platforms such as Google AI Studio, Gemini CLI, Google Antigravity, and Android Studio, enhancing developers' flexibility and creativity in AI applications.
- Enterprise and Consumer Access: Gemini 3.1 Pro is not only available to developers but also serves enterprise users through Vertex AI and Gemini Enterprise, while consumers can access it via the Gemini app and NotebookLM, broadening its market reach.
- User Base Growth: Alphabet, Google's parent company, revealed in its recent earnings call that Gemini has surpassed 740 million monthly active users, showcasing strong growth momentum in the AI sector, despite a slight decline in stock price during morning trading.
- Cloud Market Share: According to Synergy Research Group, Google's cloud business achieved a record 21% share of the global market in Q4 last year, indicating sustained growth in a competitive landscape that could enhance the company's overall profitability.
- Revenue Growth Comparison: Google's cloud segment saw a 48% year-over-year revenue increase, doubling its operating income to $5.3 billion, demonstrating its potential as a major profit driver in the rapidly expanding cloud market and reflecting strong performance in technology.
- Microsoft's Market Challenges: While Microsoft's cloud business continues to grow, its market share is declining, particularly in the AI sector, where only 15 million users have adopted Copilot, indicating a lack of market appeal that could impact future profitability.
- Advertising Revenue Performance: Despite economic turmoil and increased competition, Google's ad revenue grew over 13% year-over-year, showcasing the resilience of its core business and ongoing market demand, further solidifying its leadership position in the advertising market.











