AI Push to Boost Search Growth: More Upside Ahead for GOOGL Stock?

Alphabet’s GOOGL Search business is benefiting from AI infusion. The company is leading the search domain with 90.83% market share, followed by Microsoft’s MSFT Bing, with a 4.03% share, Yandex’s 1.56%, Yahoo!’s 1.26%, DuckDuckGo’s 0.78% and Baidu’s 0.66%, per the latest data from StatCounter. AI Overviews and AI Mode are driving overall queries and commercial queries. AI Mode is now available in more than 40 languages globally and has more than 75 million daily active users. Google Cloud is benefiting from generative AI adoption due to leading models including Gemini, Imagen, Veo, Chirp and Lyria.  

Alphabet is expanding Personal Intelligence to AI Mode in Google Search. Personal Intelligence now enables Google AI Pro and AI Ultra subscribers, if they want, to securely connect Gmail and Google Photos to AI Mode. GOOGL’s AI Mode uses Alphabet’s most intelligent model, Gemini 3 and doesn’t train directly on an users Gmail inbox or Google Photos library.

Moreover, Search is now getting used for everything, from quick answers like scores or weather to complex topics that need deeper exploration. To support this, Alphabet is rolling out two upgrades: Gemini 3 as the default model for AI Overviews globally and a smoother transition into conversation. Users can now ask follow-up questions directly, moving seamlessly from snapshots to deeper, contextual AI-powered discussions. 

Meanwhile, Google Trends has redesigned its Explore page to make discovering and comparing Search trends faster and easier. A new Gemini-powered side panel automatically suggests and compares relevant search terms, offers prompt ideas, and helps users dive deeper. The addition of shopping capabilities in AI Mode is now helping people shop conversationally in Search. Google has added new AI features in Search that help users build travel plans.

GOOGL Faces Tough Competition in AI & Cloud Domain

Microsoft has strategically embedded AI capabilities throughout its entire product ecosystem, from Azure AI services to Copilot features in Office 365 and Dynamics applications. MSFT’s substantial investment in OpenAI provides exclusive access to leading-edge language models, creating a significant competitive moat in enterprise AI adoption. Microsoft monetizes AI through existing customer relationships, reducing customer acquisition costs while expanding revenue per user.

Apart from Microsoft, Alphabet is facing stiff challenge from Amazon AMZN in the AI domain. AI integration across Amazon’s operations enhances personalization, logistics, and Amazon Web Services (AWS) offerings, strengthening competitive positioning. AWS provides cutting-edge AI and machine learning services to enterprise customers, positioning Amazon as a leader in the rapidly expanding generative AI market.

GOOGL’s Share Price Performance, Valuation & Estimates

Alphabet shares have appreciated 71.2% in the trailing 12 months, outperforming the broader Zacks Computer and Technology sector’s return of 27.8%.

GOOGL Stock Outperforms Sector

The GOOGL stock is trading at a premium, with a forward 12-month price/sales of 10.2X compared with the broader sector’s 7.44X. Alphabet has a Value Score of D.

GOOGL Valuation

The Zacks Consensus Estimate for 2026 earnings is pegged at $11.06 per share, up couple of cents over the past 30 days, suggesting 4.6% growth from fiscal 2025’s consensus estimate figure of $10.57 per share.
 

Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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