It might tempt some investors to go long on Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) now, as many think the company invincible. Yet, GOOG stock traders should be careful as Alphabet isn’t necessarily invincible in the artificial intelligence (AI) market. Plus, it’s worrisome that Alphabet’s Google is facing not just not, but two lawsuits initiated by the government.

In the world of investing, it’s a good idea to avoid businesses that are beset with lawsuits. The problem can be even worse when the U.S. Justice Department brings those lawsuits.

Not that Alphabet will never be an investable company, just be cautious and take Alphabet’s headwinds into consideration. Otherwise, you might end up holding the bag for some or all of 2023.

GOOG Stock, Layoffs and the Competition

One principle to remember is that leaner isn’t necessarily the same as better. Sometimes, layoffs are just a sign that a business isn’t doing well.

The perma-bulls might try to spin Alphabet’s cutting of 12,000 jobs as a good thing. Sure, there will probably be cost reductions due to the company’s headcount reduction.

Yet, it’s alarming that Alphabet is slashing 6% of its global workforce. Alphabet CEO Sundar Pichai has admitted, “We hired for a different economic reality than the one we face today.” This suggests that the “economic reality” for Alphabet could be a grim one in 2023.

It’s also troubling to see Alphabet possibly losing its grip on certain tech markets. For example, Alphabet’s YouTube faces stiff competition from the likes of TikTok.

In addition, as the Wall Street Journal explains, Google’s peers “have publicly released AI-based programs that can generate images and text passages from simple prompts.”

Unfortunately for Alphabet, it looks like the company’s competitors are developing and releasing AI bots that are extremely smart, fast and efficient.

Alphabet Has to Deal with Two Government Lawsuits

Along with all of those problems, Alphabet is facing two lawsuits from the Justice Department. First, there’s the one that’s set to go to trial in September, concerning Google’s alleged monopoly in the areas of online search and related advertising.

Now, Alphabet also has to deal with a separate antitrust lawsuit from the Justice Department, targeting Google’s online advertising business. That’s a major part of Alphabet’s revenue, so there’s a lot at stake here.

As the Journal reports, the government is “seeking remedies including a breakup of the business, which it called an ‘illegal monopoly.’” A breakup of Alphabet’s or Google’s business could have a profound impact on GOOG stock, so this is a time for prospective investors to be cautious.

What You Can Do Now

It’s hard to deal with one government lawsuit, not to mention two of them. Don’t expect this issue to be resolved anytime soon.

Besides, Alphabet’s competition is relentless and the layoffs aren’t a positive sign. Therefore, research GOOG stock and learn as much as you can, but consider a hands-off policy for the time being.

On the date of publication, Louis Navellier had a long position in GOOG. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.