Proactive Investors - Google parent Alphabet (NASDAQ:GOOGL) Inc (NASDAQ:GOOG) will see little impact on its Search business from the launch of OpenAI's SearchGPT, a generative AI-powered search engine with real-time access to web information, analysts at Bank of America (NYSE:BAC) believe.
Powered by GPT-4, SearchGPT is currently a prototype available to 10,000 test users. OpenAI plans to partner with third parties and use direct content feeds to build out its search results and eventually integrate search features into its chatbot ChatGPT.
Analysts believe that, although the SearchGPT news will fuel existing concerns for possible AI-related search disruption for Google, it will have a “minimal” impact on its Search revenue.
“Since its launch, ChatGPT has been drawing interest and activity on the web, and we expect interest in SearchGPT. However, Google's queries and revenues are growing with AI integration, while ChatGPT and Bing Web traffic remain a fraction of Google,” they wrote.
The biggest risk to Google’s Search business is a partnership between OpenAI and Apple (NASDAQ:AAPL), the bank’s analysts believe.
“At WWDC, Apple announced ChatGPT integration into Siri for iOS 18. The emergence of OpenAI search as a more competitive product than Bing could improve Apple's negotiating position with Google or, in the case of an adverse ruling in the DoJ case, OpenAI could potentially look to be an alternative search provider,” they wrote.
“We still think it will be difficult for any partner to come close to matching the search capabilities and financial incentives from Google.”
Alphabet has data, technology, distribution and financial advantages that allow it to mitigate new competitive threats, the analysts pointed out.
“Alphabet processes billions of search queries daily, which provides a very rich 1P dataset & can provide the best real-time information. Google also has its own data centers and powerful Gemini large language model, and with AI Overviews already launched, can quickly duplicate any search innovation from OpenAI,” they wrote.
“For distribution, Google has a strong position, on Android, partners are actively integrating Google AI in their OS, while Apple has significant financial incentive to maintain its partnership. Finally, Google's advanced monetization of commercial queries will enable it to better fund non-commercial AI answers.”
As such, the bank’s analysts repeated their ‘Buy’ rating on the stock and $206 price target.
Shares of Alphabet traded hands at $169 in the early afternoon on Friday.