Can Alphabet's AI Innovation Help Google Search Regain Market Share?

Alphabet GOOGL has been dominating the search engine market for a long time, similar to what Microsoft MSFT enjoyed with Windows. However, GOOGL seems to have been losing some of its mojo in the search market due to growing usage of Generative AI applications, including Perplexity and Microsoft-backed Open AI’s ChatGPT, as well as stiff competition from traditional search engines, including Bing, Yandex, Yahoo!, DuckDuckGo and Baidu BIDU.According to the latest data from StatCounter, Google had a market share of 89.54% in May 2025. In comparison, Bing and Baidu had market shares of 4% and 0.69%, respectively. Per Statista data, Google had a market share of 89.62% as of March 2025, the lowest over the past two decades.However, Alphabet has been taking up initiatives to improve market share in Search through AI innovations. The addition of AI mode expands AI Overview’s advanced reasoning, thinking and multimodal capabilities. AI Overviews is driving a more than 10% increase in usage of Google for queries that support AI Overviews in Google’s biggest markets, like India and the United States. AI Overview is currently used by more than 1.5 billion people monthly. AI mode is now available in the United States. Circle to Search has been another key catalyst driving user engagement. At the end of the first quarter of 2025, Circle to Search was available on 250 million devices, with usage increasing roughly 40% during the quarter. Per our model, Google Search & other revenues are expected to see a CAGR of 11% between 2024 and 2027.GOOGL Search Faces Stiff Competition From Microsoft BingMicrosoft is keeping no stone unturned to improve the capabilities of Bing. MSFT has been integrating AI into Bing thanks to its partnership with OpenAI. The company introduced Copilot Search in Bing in April this year and launched Bing Video Creator on Monday. Bing Video Creator is powered by OpenAI’s Sora, which allows users’ text prompts to be converted into short videos.Meanwhile, Baidu is leveraging self-developed ERNIE models to boost the potency of its Search engine. In March 2025, Baidu released ERNIE 4.5, which features multimodal capabilities and ERNIE X1, its first reasoning model. In April, Baidu launched ERNIE 4.5 Turbo and ERNIE X1 Turbo, which deliver improved performance at a much lower cost.GOOGL’s Share Price Performance, Valuation and EstimatesAlphabet shares have dropped 11.2% year to date (YTD), underperforming the broader Zacks Computer & Technology sector’s return of 0.1% and the Zacks Internet Services industry’s decline of 9.1%.GOOGL’s Performance Image Source: Zacks Investment Research Alphabet stock is trading at a premium, with a forward 12-month Price/Sales of 6.03X compared with the industry’s 5.05X. GOOGL has a Value Score of C.GOOGL Valuation Image Source: Zacks Investment Research The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $2.12 per share, unchanged over the past 30 days, indicating 12.17% year-over-year growth.  Alphabet Inc. Price and Consensus Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote The consensus mark for 2025 earnings is pegged at $9.47 per share, up by a nickel over the past 30 days, suggesting 17.79% year-over-year growth.Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Baidu, Inc. (BIDU): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks