Stifel lowered its rating for Alphabet shares to hold from buy, citing the competition in the advertising and cloud computing markets.
"Alphabet continues to drive growth at scale through strength in mobile search, YouTube, and programmatic advertising, while investing in other key initiatives (cloud, hardware, AI) that should serve as growth levers in 2018 and beyond," analyst Scott Devitt wrote in a note to clients Friday. "We are Hold rated on shares however given current valuation relative to historical ranges and highlight some potential longer-term concerns including: Amazon as the first entry point to product search; Google Cloud Platform market share; regulatory risk."
Alphabet reported fourth-quarter earnings results below expectations on Thursday due to rising expenses. Its shares declined 5.3 percent Friday.
Devitt maintained his $1,150 price target for Alphabet shares, representing 3 percent downside to Thursday's close.
The analyst said Amazon is a threat to Google's ad business. He noted more than half of US consumers use Amazon to search for products over the company's search engine.
"Amazon has grown its position as the first destination for consumer product searches," he wrote. "This has the potential to cannibalize Google's revenue from retail advertisers."
Devitt said Google has "high single digit" market share in the global cloud computing market compared to Amazon Web Services' more than 35 percent share.
Google's cloud computing business "is playing from behind, but there remains significant opportunity," he wrote.
The company did not immediately respond to a request for comment.
— CNBC's Michael Bloom contributed to this story.