Google's lead in search has strengthened and AI is leading to new growth, an Evercore ISI analyst says

An Evercore ISI analyst raised his price target for Alphabet's stock on Wednesday.

Google's search business isn't just withstanding the threat posed by artificial intelligence, according to an analyst. It's actually getting even more dominant.

The company's (GOOGL) (GOOG) position as the leading search engine "has actually strengthened" in the past four quarters after reaching a low point in 2024 and early 2025, Evercore ISI analyst Mark Mahaney said in a Wednesday note, citing his firm's proprietary survey. The August survey found that 78% of respondents chose Google as their primary search engine.

Mahaney said that although OpenAI's ChatGPT "remains the clear long-term share gainer," according to the survey, it has fallen from its August 2025 peak of 13% of respondents selecting it as their primary search engine. He added that ChatGPT's position has "largely plateaued" since May 2025. In the latest survey, 10% of users named it their main search mechanism.

Although some investors have worried that Google's AI efforts could cannibalize the company's search business, Mahaney said 60% of survey respondents reported "that they search more since adopting AI," compared with 8% who reported using search less.

Mahaney added that the company has proven through its past few earnings reports that AI has been a benefit to the business.

Google's deployment of AI in search has led to "material new growth" in the overall volume of queries, he said, and it has also been useful for marketers looking to find higher converting leads.

Across commercial-focused search queries, Google's position "remains scaled and broadly stable," Mahaney said.

He noted that Google kept its lead as the "first stop" for respondents when it came to use cases like buying flights and hotels, finding services, searching for vacation ideas, picking restaurants and travel planning. The search engine was also the top choice across all age groups, the survey found.

Meanwhile, Google Gemini is gaining share on ChatGPT for AI services, Mahaney said, with the gap between the two narrowing to 3 percentage points among survey respondents. That's "a record low" for the survey, which found an 11-point gap between the AI chatbots in August 2024, he said. In this case, gap refers to the difference between the portion of users who selected ChatGPT versus Google Gemini.

The results give Mahaney "increased conviction in Google search's growth outlook," he said. That led him to raise his price target on Alphabet's stock to $450 from $420, representing upside of about 30% from the stock's price of $345.23 as of Thursday afternoon.

Looking ahead, Mahaney sees emerging growth drivers for Google, including a Gemini app, sales of its custom chips to external customers and its Waymo autonomous-vehicle business.

Google's next Gemini AI model release could provide a catalyst for the stock, Mahaney said, if it can outperform leading-edge models, including those from OpenAI and Anthropic. Investors will also be focused on whether Google's custom chip business can take off, and if its Gemini Spark AI assistant can gain traction with consumers on the heels of "impressive" rollouts from Meta Platforms and AI startup Instinct, he added.

-Britney Nguyen