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

Core Insights - Alphabet Inc (NASDAQ:GOOG) faces significant challenges in its Google search business due to the rise of generative AI, particularly ChatGPT, which is projected to reach 800 million users by June [1][2] - The shift in user behavior towards generative AI tools is creating a seismic change in search habits, putting Google in a difficult position to monetize its traditional search model [2] - Despite these challenges, GOOGL shares have increased by 41% since May 10, following a favorable court ruling regarding its Chrome business in an antitrust case [3] Company Performance - Alphabet Inc. has over 1.5 billion monthly users engaging with its AI-powered Search features as of April, indicating a strong user base that may transition to new AI models like Gemini [4] - Concerns regarding the impact of generative AI on Alphabet's search business have been noted, with some investors expressing skepticism about the company's ability to respond effectively [4] Investor Sentiment - Some investors believe that fears surrounding AI threats to Google search are exaggerated, citing the ease of switching to Google's AI offerings for existing users [4] - The Mairs & Power Balanced Fund highlighted Alphabet's underperformance in Q1 2025, attributing it to security selection and broader concerns about generative AI's impact on the search business [4]