JHVEPhoto/iStock Editorial via Getty Images
In less time than it takes Saturn to orbit the Sun, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) has gone from a Stanford University research project to a technology giant valued at more than $1.7. billion.
But as generative artificial intelligence seeks to reshape almost Across all sectors of the global economy, some have wondered whether the global search engine is in danger of losing its place at the top of the mountain.
“Since OpenAI launched ChatGPT in late 2022, Google's response is more like a bodybuilder who has been told his muscles are on display, picking fights and taking a beating,” wrote Bernstein analyst Mark Shmulik, in a recent note to investors. Shmulik has a Market Perform rating and a $160 price target on Google.
Since ChatGPT and OpenAI, which is backed by billions from Microsoft (MSFT), took the world by storm in late 2022, Google has been accused of being too slow in shipping products (it has recently increased its cadence, albeit with heartbreaking results) and playing defense instead of attacking, Shmulik said.
The company has done itself a disservice by offering investors “nothing beyond the bare minimum,” Shmulik added.
Led by CEO Sundar Pichai, Google does not provide guidance; commentary on its various markets is often considered “cryptic”; and the question-and-answer portion of earnings calls are a “waste of time,” Shmulik said. While that mentality worked for most of the last 20 years (the company went public in 2004), with the supply almost 5,000% Since its IPO, the landscape has changed drastically in recent years.
Search risk is more than just generative ai
Perhaps the biggest risk for Google (aside from its breakup or antitrust issues) is losing dominance in the lucrative search engine market.
The company generated approximately $237 billion in advertising revenue in 2023, the majority of which came from search. With approximately 91% of marketIt's clear that Google is the 800-pound gorilla and others are eager to chase it.
Microsoft is integrating generative ai and OpenAI technology into all of its products, including Bing. ChatGPT itself is consistently one of the top 10 free apps in the iOS App Store, while other generation ai companies attract significant attention from investors.
Companies like Meta (META), Amazon (AMZN), Pinterest (PINS) and others are also hot on Google's heels, as vertical (or specialized) and social search are as big a threat to Google as ai is. generative, Shmulik said.
Google has tried to counter the generative threat of ai with its own offerings, notably Gemini.
However, Gemini (formerly known as Bard) has had issues in recent days, including last month when it provided answers that offended some users, prompting the company to pause ai-generated images.
Pichai called the results “completely unacceptable” and said the company would relaunch the ai model in the coming weeks.
All's well That ends well?
While Google's stock has been penalized for poor launches of generative ai products or competing announcements, its search market share has not been affected, at least not yet. Its search market share has remained relatively stable over the past 12 months at about 91%, according to statistics counter.
That provides some comfort despite the self-inflicted wounds emerging from within Google, Shmulik said.
“We continue to believe that as Gen ai answers have earned consumers' trust, Google should be better positioned to integrate these results alongside web query results, thus offering consumers the best of both worlds. “Shmulik said.
