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Pro Analysis

Sell Alphabet on future 'search apocalypse': Analyst

The Google Inc. logo hangs illuminated at the company's exhibition stand at the Dmexco digital marketing conference in Cologne, Germany.
Krisztian Bocsi | Bloomberg | Getty Images
The Google Inc. logo hangs illuminated at the company's exhibition stand at the Dmexco digital marketing conference in Cologne, Germany.

Wedbush's James Dix, one of Wall Street's top analysts, lowered his rating on Alphabet to underperform from neutral, predicting a large scale transition to attention-based paid advertising from traditional web search ads.

"The Four Horsemen of the Search Apocalypse: self-identified consumers, consumer control of IP-delivered ads, payments innovation, and attention markets," Dix wrote in a note to clients Tuesday.

"Digitizing commerce and advertising is easing targeting of self-identified consumers and consumer control of IP-delivered ads, and thus user-priced attention gateways. To target the market of people in the market, conditioning 'paid attention' on purchase could often substitute for search advertising."

The analyst gave examples of paid attention-based marketing such as an auto dealer paying consumers for a test drive and an insurance company paying prospects for a phone conversation.

Dix's picks have a 14.4 percent one-year average return with a 63 percent success rate, according to analyst ranking service TipRanks, placing him in the top 9 percent of all Wall Street analysts covering any industry.