Alphabet Inc., a parent company of Google, have seen its stocks rise significantly in the past few weeks, with Monday morning trading resulting in a 2% gain and a new 52-week high. Since closing at $89.13 on February 24th, Alphabet Inc.’s GOOG and GOOGL stock have surged more than 40%, perhaps due to a resurgence of confidence since the rise of ChatGPT, who Microsoft Corp. are investors in.
Investors had initially been worried that Google could lose market share to Bing, Microsoft’s search engine, causing the initial dip of the stock in February.
However, research from BofA Securities analyst Justin Post showed that traffic to Google’s site had remained stable during the rise of ChatGPT’s parent company. He noted in a May 2021 note sent to clients that while Bing downloads have been higher since a late-April surge, Google downloads have remained constant, suggesting that additional Bing activity is only going to be incremental. This indicates that the current buzz of ChatGPT hasn’t affected the web search giant in a negative manner.
In addition, Post noted that the pre-May 18th data likely does not include the 710,000 downloads of the app seen in the first three days of its launch, and he still sees no evidence of a traffic impact on Google. Post believes that the performance, monetization, and OS ecosystem advantages of Google’s Android partners should prevent it from getting usurped as the default search engine.
Alphabet Inc. has three main pillars contributing to its success in search engine market: superior data, AI capabilities, and distribution. With the relief provided by Post’s research, Alphabet Inc.’s stock is the strongest it has been this year, and looks set to remain that way.
