Was Gene Munster Wrong About Alphabet (GOOG) Search Business?

We recently published Top 10 Analyst Calls on Trending Stocks You Shouldn’t Miss. Alphabet Inc (NASDAQ:GOOG) is one of the major analyst calls.

Deepwater’s Gene Munster said in a CNBC program in May that Alphabet Inc (NASDAQ:GOOG) Google search business is under threat from ChatGPT, which was expected to hit 800 million users by June.

“So that’s going to put it at about a quarter of the Google daily population is also going to be using GPT. And that’s obviously just one of a few generative products. And so, the central question that I think that Google investors should ask is ask themselves if they fall into the camp of using generative AI daily or ask anybody who does, how has your search behavior changed? And I think the answer is overwhelmingly it is a significance, a seismic change. And on top of that is that this effectively puts Google in a very difficult place into a corner. And that corner is that to monetize—what the reason why people love this is the simple straightforward answer. It might hallucinate, but they love the simple answer, and that’s something by definition that blue links can’t give them. So very complex, very complex set of challenges that’s ahead of Google, and this golden goose that they have is showing its age.”

GOOGL shares are up 41% since Munster’s comments that were made on May 10. The stock is rising following a court ruling that said the company does not have to sell its Chrome business in an antitrust case.

Alphabet Inc. (NASDAQ:GOOG) bulls believe concerns around AI-related threats to Google search are overstated. Google has an edge over competitors because it’s easier for the billions of users of its search engine to switch to Gemini instead of opting for a completely new model. As of April, Google had over 1.5 billion monthly users interacting with its AI-powered Search overviews.

Mairs & Power Balanced Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q1 2025 investor letter:

“The Fund’s holdings in the Communications Services sector dragged on portfolio returns during the quarter due primarily to security selection. Alphabet Inc. (NASDAQ:GOOG) led underperformance as it fell in tandem with the other mega cap tech stocks. Additionally, there is increasing concern about the impact of generative AI on Alphabet’s search business and whether it will be able to meaningfully respond.”

While we acknowledge the potential of GOOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.