icon
icon
icon
icon
Upgrade
icon

Is Google (GOOGL.US) facing a challenge to its dominant position from SearchGPT? Wedbush maintains that Google's moat is unassailable, reiterating its "run ahead of the cycle" rating

AInvestTuesday, Jul 30, 2024 9:50 am ET
1min read

Wedbush analysts believe that the search engine unveiled by OpenAI last week could pose a "threat" to Google's (GOOGL.US) stock price in the near term, though the firm's analyst Scott Devitt reiterated a "run-rate" rating on the stock and a price target of $205.

Devitt noted that "the potential impact of generative AI on core search business has been a market focus over the past 12-18 months." He pointed to the fact that Google has been working to alleviate market concerns about its artificial-intelligence-driven search features in the U.S., which involve queries, user engagement and overall user feedback.

According to Statcounter, Google has a market share of more than 91% in the search market. While OpenAI's SearchGPT is currently only open to 10,000 users and publishers for testing, the company, backed by Microsoft (MSFT.US), has potential.

OpenAI said in its official blog: "We are committed to building a thriving publisher and creator ecosystem that helps users discover more publisher websites and experiences and brings more choice to the search landscape."

While Devitt acknowledged that SearchGPT could pose some challenges in the near term, he still believes Google's search moat "is very strong." He stressed: "We believe the market is underweighting Google's moat and the company's ongoing progress in search has not been appropriately recognized."

It is understood that Google's advantages include its vast data resources, large user base, computing infrastructure optimized for AI, access to top engineering talent and profitability.

Devitt further noted: "We believe that Google's existing infrastructure advantages are underweight and overlooked by the market. We remain bullish on Google's ability to optimize the usability, monetization and cost of generative AI search results."

While OpenAI's search engine brings a fresh element to the market, Google is still seen as being able to maintain its market leadership position with its deep and strong advantages in the search space.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.