Why Alphabet Stock Slipped Today

On Monday, an Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) rival took a turn in the spotlight, draining attention and sentiment from the tech giant. The Google parent's two publicly traded stocks ended the day around 1% lower in price, comparing unfavorably to the nearly 1% gain of the S&P 500 (SNPINDEX: ^GSPC).

Here comes competition

That rival is Alphabet's peer in the self-driving taxi space, Tesla. On Sunday, the high-profile auto company officially launched its Robotaxi service in Austin, Texas. Although rides were limited to selected users, the event went off smoothly, without any reported accidents.

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While Alphabet's great strength and the source of its wealth is the advertising it sells for its omnipresent search engine, the company has been pushing into other cutting-edge tech ventures for much of its corporate life. One of the more prominent of these is its own autonomous taxi service, Waymo, which has been operational in a handful of U.S. cities for months, even years.

With the launch of the Tesla service, Alphabet now has a competitor in the self-driving taxi space. Investors rarely like when one of their companies suddenly loses a big competitive advantage.

King of the road for now

Yet the reactive hit to Alphabet's stock was minimal, most likely because many investors realize that the self-driving taxi segment isn't (yet) large enough to seriously impact either their company or Tesla.

On top of that, Tesla hasn't revealed when, where, or to what degree it'll expand its Austin Robotaxi rollout. This suggests that the company is being cautious -- as it should be -- about widening the service.

So far, the auto-taxi space has been developing more smoothly than many expected; if it maintains the pace, such services will be commonplace before long. While Alphabet's Waymo now has competition (and more will surely come), it's not getting knocked off its perch as No. 1 in the near future.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.