Google is no longer the center of the Internet universe, according to Stifel Nicolaus media analyst Jordan Rohan, and that's one of the reasons he downgraded the company to "hold" from "buy" Wednesday.
"Google has a phenomenal core business, but it’s mature and somewhat cyclical," he told CNBC. "My biggest concern is Google's centrality. They were really the center of the Internet a few years ago, but is fading."
While Google is one of the stronger players in ecommerce, it faces increasing competition, Rohan said.
Amazon is his stock pick in the sector. Despite a valuation higher than that of Google, Amazon is becoming "this generation's Wal-Mart" as more consumers look to the site for getting the best prices on products. Apple is also gaining in ecommerce, thanks to its successful products. There is also an "axis of social and media that is developing around Facebook, and that could materialize into something bigger," Rohan said.
So Google "has a great position, but it’s now one of a handful instead of the dominant and central player on the Internet."
In his note, Rohan said any rise in Google share price will be limited as long as its earnings outlook remains uncertain. He also said the company is losing its focus. The analyst told CNBC the company's plan to buy handset maker Motorola Mobility "may be a distraction to the [Google] management team."
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Jordan Rohan does not own shares but Stifel Nicolaus makes a market in Google.