<\/p>\n
Ever since ChatGPT exploded in popularity, investors have worried that artificial intelligence could weaken Google\u2019s most important business.<\/p>\n
Instead of searching for information and clicking through Google\u2019s advertising-heavy results, consumers can increasingly ask an AI chatbot for a direct answer.<\/p>\n
For Alphabet, the threat is real as Google Search is its financial engine, generating more than half of the company\u2019s total revenue.<\/p>\n
But with Alphabet set to report second-quarter earnings next week, new data suggests the feared disruption has not materialized yet.<\/p>\n
Google\u2019s traffic and search-market share remained stable in June, while its Gemini AI platform continued to gain users, according to a Bank of America note shared with TheStreet.<\/p>\n
BofA sees Google Search holding its ground<\/p>\n
BofA analyst Justin Post used web traffic data from Similarweb, mobile usage estimates from Sensor Tower, and search market share figures from Statcounter for updated information.<\/p>\n
According to the data, average daily global web visits to Google increased 4% year over year to 2.8 billion in June.<\/p>\n
More Google:<\/p>\n
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That made Google\u2019s web traffic 16 times larger than ChatGPT\u2019s and roughly 90 times larger than Anthropic\u2019s Claude.<\/p>\n
ChatGPT averaged 179 million daily global web visits, unchanged from both a year earlier and May.<\/p>\n
In the U.S. alone, Google\u2019s daily web traffic increased 3% year over year to 535 million.\u00a0<\/p>\n
While ChatGPT traffic rose 19% to 31 million, it remained only about 6% of Google\u2019s total and declined 1% from May.<\/p>\n
The results suggest that consumers are adding AI tools to their online routines without abandoning Google Search.<\/p>\n
Google\u2019s global search engine market share also increased 79 basis points from May and 171 basis points from a year earlier to 91.3%.<\/p>\n
In the U.S., Google\u2019s share rose 86 basis points from May to 86.7%.<\/p>\n
BofA said Google\u2019s recent description of an \u201cexpansionary moment\u201d for Search could point to higher usage, more commercially valuable queries, and additional opportunities to place ads inside new AI-powered search formats.<\/p>\n
Given the stable traffic and strong e-commerce activity during the second quarter, the firm sees potential upside to Wall Street\u2019s current Search revenue estimates.<\/p>\n
BofA maintained its Buy rating and $430 price target on Alphabet stock, representing 20.4% upside from the share price used in the report.<\/p>\n
Alphabet\u2019s Class A stock has also risen 9% over the past quarter.<\/p>\n
Bank of America tests Google Search traffic against competitors.<\/p>\n
Kenneth Cheung / Getty Images<\/p>\n
Gemini growth gives Google AI advantage<\/p>\n
Google is not merely defending its traditional Search business.<\/p>\n
Its standalone Gemini platform is also growing quickly.<\/p>\n
Gemini\u2019s global mobile daily active users increased 295% year over year to 118 million in June.\u00a0App added 8 million daily users in June from May, representing a monthly growth rate of 7%.<\/p>\n
This growth followed several recent updates that have made Gemini faster, which include:<\/p>\n
Gemini Spark, a personal AI agentGemini Omni for video creation, following the success of Nano Banana for images.Gemini 3.5 Flash, its best model yetGemini Live, which is now part of Android and iOS<\/p>\n
ChatGPT remained much larger, with 441 million global mobile daily active users, but its audience has been flat since May.\u00a0<\/p>\n
Another growing competitor, Claude, reached 18 million daily users, up 9% during the month.<\/p>\n
Meanwhile, the main Google app reached 2.2 billion global mobile daily active users, up 12% year over year.<\/p>\n
Alphabet can distribute Gemini through Search, Android, Chrome, and Workspace, while also building the Gemini app as a direct competitor to ChatGPT.<\/p>\n
And this has helped Gemini grow rapidly, although ChatGPT\u2019s mobile audience still remains substantially larger.\u00a0<\/p>\n
This distribution advantage can allow Alphabet to expand in generative AI without sacrificing the existing products that fund its investments.<\/p>\n
The wider AI battle is also becoming more contentious.<\/p>\n
As TheStreet recently reported, Apple sued OpenAI and two former Apple employees on July 10, alleging that they stole trade secrets to help develop OpenAI\u2019s consumer hardware products.<\/p>\n
OpenAI denied having any interest in other companies\u2019 trade secrets.<\/p>\n
The lawsuit illustrates how competition among the largest AI companies is spreading beyond chatbots into hardware, distribution, talent, and intellectual property.<\/p>\n
Alphabet earnings to test bullish view amid AI risks<\/p>\n
Alphabet\u2019s upcoming earnings, scheduled for July 22, will show whether its resilient traffic is translating into continued revenue growth.<\/p>\n
In the first quarter, Alphabet\u2019s total revenue increased 22% year over year to $109.9 billion.<\/p>\n
Google Search and other revenue rose 19% to $60.4 billion.Google Cloud revenue surged 63% to $20 billion.\u00a0Cloud operating income more than tripled to nearly $6.6 billion.<\/p>\n
Alphabet CEO Sundar Pichai said Search queries reached an all-time high during the quarter, with AI Overviews and AI Mode driving overall Search growth.<\/p>\n
\u201cIt\u2019s clear that our AI investments and full-stack approach are driving performance across our business,\u201d said Pichai at the company\u2019s earnings call.<\/p>\n
Google also said Gemini\u2019s improved understanding of user intent was helping the company serve ads for longer and more complex searches that were previously difficult to monetize.<\/p>\n
Alphabet reduced the cost of producing its core AI Search responses by more than 30%.<\/p>\n
This came after upgrading AI Overviews and AI Mode to Gemini 3, an important step as the company seeks to prevent higher computing costs from eroding Search’s profitability.<\/p>\n
BofA estimates that Alphabet will report second-quarter earnings of $2.99 per share.<\/p>\n
However, investors will also be watching Alphabet\u2019s enormous AI spending bill.<\/p>\n
The company raised its 2026 capital expenditure guidance to between $180 billion and $190 billion and said spending is expected to increase significantly again in 2027.<\/p>\n
Alphabet said the investments are necessary to meet unprecedented demand for AI computing capacity, but acknowledged that higher depreciation, energy, and data-center operating costs will pressure expenses.<\/p>\n
BofA identified Alphabet\u2019s elevated valuation, OpenAI\u2019s potential advertising expansion, and the arrival of increasingly competitive AI models as key risks.<\/p>\n
For now, however, the bank\u2019s data suggests Google is managing both sides of the AI transition.<\/p>\n
Search remains dominant, Gemini is gaining users, and Alphabet is finding more ways to monetize complicated AI-powered queries.<\/p>\n
Investors will be looking for evidence that AI is expanding Google Search and Cloud revenue fast enough to justify the billions Alphabet is spending to stay ahead.<\/p>\n
Related: 99-year-old convenience store chain closing 645 stores<\/p>\n
#Google #stock #price #faces #major #test #ahead #earnings<\/p>\n","protected":false},"excerpt":{"rendered":"
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