Google's AI Advancements Set to Boost Search Dominance and Stock Value

Buy this megacap tech stock that's set to rally more than 20% due to AI, says Citizens

The ramp up in artificial intelligence may send shares of Alphabet higher in the coming months, according to Citizens. The investment firm upgraded the "Magnificent Seven" name to market outperform from market perform and set its price target at $220, implying nearly 27% upside from Thursday's close. "We believe AI is a net tailwind, with ChatGPT's impact too small today to move enough queries away from Google to materially impact results, while AI is expanding the search opportunity by answering a broader array of queries and extending monetization as AI better infers user intent," analyst Andrew Boone wrote in a note published Thursday. While the megacap tech stock has fallen more than 8% this year, it has rebounded about 6% over the past three months. It has also jumped more than 4% in the past week amid investor confidence in AI, which propelled other stocks linked to the industry like Nvidia higher this week as well. GOOGL 3M mountain GOOGL, 3-month Boone thinks that Google's AI Overviews - a feature that offers a summary of answers to search questions at the top of Search - will reach 4 billion monthly users by the third quarter of this year, seeing that the feature will cover about two-thirds of queries by the next quarter. That would be up from 1.5 billion monthly users in the first quarter of this year. "With AI Overviews becoming generally available in the U.S. as of May and leading to 10% query growth in testing, we believe AI is a net tailwind," he continued. "Net/net, AI is growing the use of search at a faster rate than ChatGPT is taking share." The analyst also projects that Search revenue growth will accelerate in the second as a result of AI supporting query growth and the development of Google's ad products. Wall Street is mostly bullish on Alphabet, as 43 out of 55 analysts have issued strong buy or buy ratings on the stock. Its nearly $202 consensus target also reflects more than 16% upside from here.

This Is Google's Secret Weapon To Outpace ChatGPT In Search War - Alphabet (NASDAQ:GOOGL)

Citizens JMP analyst Andrew Boone upgraded Alphabet GOOGL GOOG from Market Perform to Market Outperform with a price forecast of $220 on Thursday. Boone's upgraded outlook is primarily driven by the belief that Artificial Intelligence (AI) will serve as a net tailwind for Google. He argues that the impact of ChatGPT on diverting search queries away from Google is currently negligible and insufficient to materially affect its results. Conversely, AI is seen as expanding Google's search opportunities by addressing a broader range of queries and enhancing monetization through improved inference of user intent. Also Read: Google Future Divides Wall Street As AI Hype Meets Skepticism A key part of Boone's analysis centers on Google's AI advancements. He highlights that OpenAI's platforms currently boast 800 million weekly active users, significantly less than Google's reported 5 billion+ active users. Google's AI Overviews, which became generally available in the U.S. in May 2025, has already demonstrated a 10% query growth in testing. Boone projects that AI Overviews will expand from 1.5 billion monthly users in the first quarter of 2025 to 4 billion by the third quarter of 2025, eventually covering approximately two-thirds of all queries by the next quarter. Assuming Google maintains this 10% query growth as AI handles a wider array of questions and delivers better answers, Boone anticipates a mid-single-digit query growth tailwind for Google in the third quarter of 2025. While ChatGPT does offset some of this growth, Boone estimates its subscriber base to be only 20 million in the second quarter of 2025, based on OpenAI's reported $10 billion Annual Recurring Revenue (ARR) as of June 2025. He suggests that negative query growth is most severe for these subscribers, implying that AI Overviews' wider distribution will accelerate Google's overall query growth in the second and third quarters of 2025. Essentially, AI is increasing overall search usage faster than ChatGPT is capturing market share. Boone is particularly optimistic about Google's Smart Bidding Exploration and AI Max for Search Campaigns. These tools enable advertisers to move beyond keyword bidding and focus on the intent behind a query, allowing Google to commercialize more than the historical ~20% of monetizable searches. This, combined with increased confidence in query growth, leads Boone to project an acceleration in Google's search revenue growth for the second and third quarters of 2025. For the second quarter of 2025, Boone has adjusted his revenue forecast for Alphabet to $79.9 billion (up from $78.9 billion) and EPS to $2.16 (up from $2.11). The analyst previously downgraded Google due to potential antitrust penalties, specifically concerning the possibility of a judge disallowing Google's payments to Apple Inc. AAPL. Given that over 50% of U.S. queries run through Apple devices, such a ruling could significantly impact Google's distribution. Boone had previously quantified this potential impact as a two-turn effect on shares, considering both the potential for users to switch back to Google and a reduction in Traffic Acquisition Costs (TAC). However, he now notes that Alphabet's shares are trading two turns lower than at the time of his January downgrade, suggesting this potential risk has been largely priced into the stock. Consequently, he upgraded the shares ahead of the court's decision. Price Action: GOOGL stock is trading higher by 0.46% to $174.33 at last check Friday. Read Next: Google Cloud Hires Former Oracle CFO As AI Race Heats Up Image via Shutterstock GOOGLAlphabet Inc$172.97-0.33%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum28.26Growth87.02Quality86.11Value53.05Price TrendShortMediumLongOverviewAAPLApple Inc$201.870.43%GOOGAlphabet Inc$173.92-0.29%Market News and Data brought to you by Benzinga APIs