This Is Google's Secret Weapon To Outpace ChatGPT In Search War

Core Viewpoint - Citizens JMP analyst Andrew Boone upgraded Alphabet from Market Perform to Market Outperform with a price forecast of $220, driven by the belief that AI will positively impact Google's search capabilities [1]. Group 1: AI Impact on Search - AI is expected to expand Google's search opportunities by addressing a broader range of queries and enhancing monetization through improved user intent inference [2]. - Boone highlights that OpenAI's platforms have 800 million weekly active users, significantly less than Google's 5 billion+ active users [3]. - Google's AI Overviews, launched in May 2025, demonstrated a 10% query growth in testing [3]. Group 2: User Growth Projections - Boone projects that AI Overviews will grow from 1.5 billion monthly users in Q1 2025 to 4 billion by Q3 2025, potentially covering two-thirds of all queries by the next quarter [4]. - Assuming a sustained 10% query growth, Boone anticipates a mid-single-digit query growth tailwind for Google in Q3 2025 [4]. Group 3: Competitive Landscape - While ChatGPT offsets some growth, Boone estimates its subscriber base to be only 20 million by Q2 2025, based on OpenAI's reported $10 billion Annual Recurring Revenue [5]. - AI Overviews' wider distribution is expected to accelerate Google's overall query growth, outpacing ChatGPT's market share capture [6]. Group 4: Advertising Tools and Revenue Growth - Boone expresses optimism about Google's Smart Bidding Exploration and AI Max for Search Campaigns, which allow advertisers to focus on query intent rather than just keywords [7]. - This shift is expected to enable Google to monetize more than the historical ~20% of monetizable searches, leading to an acceleration in search revenue growth for Q2 and Q3 2025 [7]. Group 5: Financial Forecast Adjustments - For Q2 2025, Boone adjusted Alphabet's revenue forecast to $79.9 billion (up from $78.9 billion) and EPS to $2.16 (up from $2.11) [8]. - Boone previously downgraded Google due to potential antitrust penalties but notes that the risk has been largely priced into the stock, leading to the upgrade ahead of the court's decision [9].