Alphabet Inc (NASDAQ:GOOG) continues to demonstrate resilience in the AI-driven search environment, prompting analysts at Bank of America to maintain their ‘Buy’ rating and $200 price target.
This implies upside of about 19% from Google’s share price of $168 on Thursday afternoon.
May data showed steady search traffic, increased Google app usage, and a notable uptick in Gemini engagement.
“May data suggests flattish month-over-month search traffic and a marginal decline in Google global search share, down 8 basis points month-over-month,” analysts wrote.
They also pointed to a largely stable performance in Google’s core search business. Daily global web visits to Google held steady at 2.7 billion, though this marked a 2% year-over-year decline, while US visits were also down 2% year-over-year.
Despite small gains by Bing and others, Google remains the dominant player. In the US, the picture was even more stable, with Google’s search share actually up 22 basis points month-over-month, helped by gains on desktop.
While Google's global search share declined slightly to 89.6%, analysts noted that the loss was marginal.
Notably, Alphabet’s AI assistant Gemini saw a substantial 25% month-over-month increase in traffic following its showcase at Google I/O.
The analysts noted that this signals renewed user interest after a relatively quiet launch period. Year-over-year, Gemini usage was up 40%, reaching 17 million daily visits.
User behavior is shifting towards mobile and app-based search with Google app users up 12% month-over-month, the analysts highlighted. They believe this suggests that Google's strategy to integrate AI features directly into its app may be resonating with users.
Although ChatGPT and other AI-native search tools continue to see rapid growth, the analysts emphasized the scale gap. “ChatGPT visits (up 3% month-over-month) and app users (up 14% month-over-month) continue to grow rapidly but remain a small fraction of Google,” they wrote.
Bank of America remains optimistic that Alphabet’s deep integration of AI into search can expand the addressable monetization opportunity.
“While ChatGPT's traffic continues to grow rapidly, we think Google remains well-positioned given its scale, multi-product reach, data assets, and robust monetization infrastructure,” they wrote.
“Moreover, we think AI can expand overall search monetization by better understanding the intent behind complex and long-tail queries that were previously hard to monetize.”