Alphabet Stock Upgraded as AI Overviews Drives Growth in Google Search
Analyst Cites AI Overviews Adoption and User Growth as Key Drivers for GOOGL
Alphabet (GOOGL) stock received an upgrade from Citizens JMP analyst Andrew Boone, who highlighted the rising momentum of the company’s AI Overviews feature.
- Boone raised his rating to Hold from Buy and set a price target of $220 for the stock.
- The analyst pointed to the rapid expansion of Google’s AI Overviews, now available in over 200 countries and more than 40 languages.
AI Overviews, powered by generative AI, delivers concise search summaries, enhancing the user experience and driving new engagement trends.
- Boone predicts the feature’s success will more than offset any share loss to competitors such as OpenAI’s ChatGPT.
Bullish Outlook on User Growth and Engagement
Boone contrasted OpenAI’s 800 million weekly active users with Google’s more than 5 billion active users, highlighting Google’s significant reach.
- The general availability of AI Overviews in the U.S. since May has resulted in a 10% query growth during testing.
- Boone views AI as a “net tailwind” for Alphabet’s search business.
His projections show the number of AI Overviews users rising from 1.5 billion monthly users in Q1 2025 to an estimated 4 billion by Q3 2025.
- The feature is expected to cover two-thirds of all Google Search queries by next quarter, signaling a broad and rapid adoption.
Boone believes Google’s query growth could see a mid-single-digit boost in Q3 2025 as AI Overviews expands, offering better results and understanding user intent.
- This not only answers a broader set of queries but also improves monetization opportunities for Google.
Analyst Consensus and Stock Outlook
Boone’s upgrade reflects a broader confidence in Google’s ability to grow search usage faster than ChatGPT is gaining market share.
- As he concluded, “AI is growing the use of search at a faster rate than ChatGPT is taking share.”
Across Wall Street, Alphabet holds a Moderate Buy consensus rating.
- The average price target for GOOGL is $199.20, representing a 15% upside potential from current levels.
- GOOGL stock remains down more than 8% year-to-date despite ongoing innovations.