Despite being the third-largest U.S. company, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) hasn't had a great year. The stock is down 31% this year, underperforming both the Nasdaq Composite and the S&P 500.

While this underperformance stings for this year, does it set the stage for outperformance next year? After all, you can't change the past, but you can invest in the future. So let's find out if Alphabet is set for a recovery in 2023.

First, let's understand how Alphabet's 2022 went. Alphabet's fall can be associated with its concentration in the advertisement industry. With nearly 80% of its total revenue derived from advertisement sources, Alphabet is highly exposed. The advertisement business is historically cyclical; it rises and falls with the economy.

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Source Fool.com