You typed in a question and clicked a few links, and Google could get paid if you landed on an ad. For years, that simple cycle helped turn Google into a trillion-dollar titan.
But now, that model is under threat.
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AI-powered chatbots like OpenAI’s ChatGPT are rapidly changing how people find answers. Instead of browsing through links, users are getting direct summaries on AI. These “zero-click” searches quietly erode the economics that built the modern internet.
The number of users is growing fast. OpenAI CEO Sam Altman said in April that ChatGPT already has “something like 10% of the world” in terms of users, pegging the number closer to 800 million, Forbes reported.
Even Google seems to know it. It’s giving AI answers, called AI Overviews, right at the top of the page.
“What’s changing is not that fewer people are searching the internet…It’s that more and more the answers to Google are being answered right on Google’s page. That AI box at the top of Google is now absorbing that content that would have gone to the original content creators,” Cloudflare CEO Matthew Prince said in a CNBC interview.
Alphabet stock closed at $174.92 on June 6. The stock is down 8% year-to-date.
Image source: Morris/Bloomberg via Getty Images
Alphabet’s earnings still shine
Alphabet (GOOGL) , Google’s parent company, isn’t showing any cracks just yet.
In April, the company posted first-quarter revenue of $90.23 billion, topping Wall Street expectations. Earnings per share came in at $2.81, far above the forecasted $2.01.
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Advertising, the backbone of Google’s business, brought in $66.89 billion, accounting for nearly three-quarters of total revenue. Its “Search and other” segment rose almost 10% year over year, hitting $50.7 billion.
Meanwhile, Google’s own AI tools are starting to show traction. AI Overviews now has 1.5 billion users per month, up from 1 billion in October, the company said.
So far, the numbers suggest that AI isn’t cannibalizing Google’s business yet.
Analysts say Google isn’t losing its grip
Bank of America remains bullish on Alphabet stock. The firm reiterated a buy rating and a price target of $200, which implies a potential 15% upside from current levels, according to a recent research report.
The firm said in May, Google’s global average daily web visits held steady at 2.7 billion, unchanged from the previous month and down 2% from a year earlier. ChatGPT, meanwhile, saw a 3% month-over-month increase to 182 million, marking a 105% jump year-over-year.
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In the U.S., Google traffic slipped 2% year-over-year to 524 million daily visits, while ChatGPT surged 112% over the same period to 26 million.
Although Google has highlighted the growing reach of its AI Overviews, analysts are uncertain whether it’s translating into more traffic. “So far, we are not seeing a lift in Google traffic from AI Overviews expansion, though we think the search experience is much improved,” the analysts wrote.
The competition is real. Google’s global search share also edged down in May, falling 8 basis points month-over-month and 123 basis points year-over-year to 89.6%, according to Statcounter.
Still, Bank of America analysts remain optimistic on Alphabet stock. “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,” the analysts said.
“AI can expand overall search monetization by better understanding the intent behind complex and long-tail queries that were previously hard to monetize,” they added.
Morningstar’s Malik Ahmed Khan echoed that sentiment, saying Alphabet’s diverse revenue streams and global exposure should cushion any hits, even as regulatory and AI risks mount, according to a May research report.
Alphabet stock closed at $174.92 on June 6. The stock is down 8% year-to-date.
