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How Amazon’s Online Ad Push Can Impact Google

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Amazon is reportedly ramping up its presence in the online advertising space, which is currently dominated by Google. As Amazon looks to strengthen its presence in the online ad market, it could take some share from Google, which is the largest player in the global online ad market with a share of nearly 45%. Our Interactive Dashboard  shows how Amazon’s growth in the online ad space could impact Google’s revenues and valuation. Below we discuss Amazon’s potential, and Google’s sensitivity to heightened competition.

How Will Amazon’s Increasing Share In the Market Impact Google?

To set your expectations for Amazon’s online ad market share gain, you can use our dashboard to adjust Amazon’s market share forecasts. Our base case sets this figure at 0%, while the upside case for Amazon sets it at an average of 3.25% for the forecast period.

Even with an average gain of 3.25% in the online ads market for Amazon, if Google loses a corresponding amount, its valuation could decline by around 5%. Of course, it is unlikely that Amazon’s ad share growth would come entirely at Google’s expense, but this demonstrates Google’s reliance on the ad space and its sensitivity to market share changes.

Our price estimate for Alphabet stands at $1082, implying a slight discount to the market price.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Referenced Symbols: GOOG
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