Google's Gemini Surges to 18.2% Market Share in Generative AI in One Year
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 27 2025
0mins
Should l Buy GOOG?
Source: Yahoo Finance
- Market Share Surge: Google's Gemini has increased its generative AI web traffic share from 5.4% to 18.2% over the past year, indicating a rapid rise in market presence that has directly impacted OpenAI's ChatGPT, which saw its share drop from 87.2% to 68.0%, highlighting a significant shift in competitive dynamics.
- User Behavior Shift: The success of Gemini is attributed to its deep integration with platforms like Chrome, Android, and Workspace, making AI features more accessible in daily workflows, thereby enhancing user engagement and trust, which further solidifies Google's leadership in the AI sector.
- Competitive Comparison: Despite Microsoft's Copilot being embedded in Windows and Edge, its market share has only slightly decreased from 1.5% to 1.2%, underscoring the importance of product trust, as Gemini effectively converts its extensive reach into habitual usage, reflecting Google's advantage in user trust.
- Strong Stock Performance: Alphabet's Class C shares have risen 65.59% year-to-date and 60.16% over the past year, significantly outperforming the Nasdaq 100 index's gains of 22.31% and 17.86%, demonstrating strong market confidence in Google's growth potential.
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Analyst Views on GOOG
Wall Street analysts forecast GOOG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for GOOG is 336.08 USD with a low forecast of 255.00 USD and a high forecast of 400.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
14 Buy
1 Hold
0 Sell
Strong Buy
Current: 331.330
Low
255.00
Averages
336.08
High
400.00
Current: 331.330
Low
255.00
Averages
336.08
High
400.00
About GOOG
Alphabet Inc. is a holding company. The Company's segments include Google Services, Google Cloud, and Other Bets. The Google Services segment includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. The Google Cloud segment includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Its Other Bets segment is engaged in the sale of healthcare-related services and Internet services. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Google Cloud Platform provides access to solutions such as artificial intelligence (AI) offerings, including its AI infrastructure, Vertex AI platform, and Gemini for Google Cloud; cybersecurity, and data and analytics. Google Workspace includes cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Profitability Improvement: The operating income for Google Cloud skyrocketed by 154% to $5.3 billion, with the operating margin nearly doubling from 17.5% to 29.9%, indicating substantial progress in cost control and efficiency enhancement, which strengthens future profitability potential.
- Market Reaction Volatility: Despite exceeding Wall Street expectations, Alphabet's stock fell 6.5% post-report, resulting in a market cap loss of approximately $250 billion over three days, reflecting investor concerns over the company's massive AI infrastructure spending, which may impact short-term investor confidence.
- Long-Term Growth Potential: Alphabet plans to double its capital expenditure budget in 2026, signaling confidence in Google Cloud's future growth, suggesting that analysts should reassess its growth prospects to reflect the segment's potential and changing market demand.
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- Earnings Beat: Alphabet's Q4 2025 results exceeded Wall Street estimates with a 2.4% revenue surprise and a 6.8% earnings outperformance, reflecting strong financial performance despite a 6.5% stock drop post-report.
- Cloud Business Surge: Google Cloud's sales surged 48% year-over-year to $17.7 billion, representing 15.5% of Alphabet's total revenue, while operating income soared 154% to $5.3 billion, indicating robust growth potential in the AI sector.
- Market Reaction Analysis: Although Alphabet lost approximately $250 billion in market value over three days due to concerns over massive AI infrastructure spending, it remains the top performer among the
See More
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- Significant Revenue Growth: Google Cloud's revenue surged 48% year-over-year in Q4 2025, reaching $17.7 billion and accounting for 15.5% of Alphabet's total sales, demonstrating the segment's robust performance amid the AI boom and solidifying the company's position in the cloud computing market.
- Profitability Improvement: The operating income for Google Cloud skyrocketed by 154% to $5.3 billion, with the operating margin nearly doubling from 17.5% to 29.9%, indicating substantial progress in cost control and efficiency enhancement, which strengthens future profitability potential.
- Market Reaction Volatility: Despite exceeding Wall Street expectations, Alphabet's stock fell 6.5% post-report, resulting in a market cap loss of approximately $250 billion over three days, reflecting investor concerns over the company's massive AI infrastructure spending, which may impact short-term investor confidence.
- Long-Term Growth Potential: Alphabet plans to double its capital expenditure budget in 2026, signaling confidence in Google Cloud's future growth, suggesting that analysts should reassess its growth prospects to reflect the segment's potential and changing market demand.
See More
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- Revenue Surprises: Alphabet reported Q4 2025 revenue of $17.7 billion, a 48% year-over-year increase that surpassed Wall Street estimates by 2.4%, showcasing its strong performance in the AI sector, although the stock price fell due to infrastructure spending plans.
- Significant Profitability Boost: The operating income for the quarter soared 154% to $5.3 billion, indicating rapid profitability growth in the Google Cloud segment, which further solidifies Alphabet's competitive position in the cloud computing market.
- Market Value Fluctuations: Despite a 6.5% drop in Alphabet's stock price post-earnings, resulting in a $250 billion market value loss over three days, it remains the best performer among the
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- Stock Price Pressure: Microsoft has had a rough start to 2026, with its stock down 11% year-to-date, including a 10% drop in a single day following its second-quarter earnings report, complicating its ability to outperform the market this year.
- Cloud Growth Potential: Azure, Microsoft's cloud computing division, achieved a remarkable 39% revenue growth in Q2 2025, while the overall growth rate was 17%, underscoring the central role of cloud computing in the company's strategy.
- Competitive Advantage Analysis: Although Microsoft does not separately disclose Azure's profits, its operating margins are estimated to be between 25% and 35%, which may be lower than Microsoft's overall operating margin of 47%, compared to competitors AWS and Google Cloud.
- Future Outlook: With the ongoing demand for cloud computing, Microsoft is positioned to achieve stronger market performance in the coming years through its Azure platform, despite current stock price pressures, as the potential of cloud computing remains a key to its strategic success.
See More
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- Azure Growth Momentum: Microsoft's Azure cloud computing division achieved a remarkable 39% revenue growth in Q2 2025, highlighting its critical role in the company's overall 17% growth, indicating that cloud computing will continue to drive Microsoft's future development.
- Market Competition Analysis: Although Microsoft does not disclose Azure's financials separately, its operating margins are likely between 25% and 35%, compared to competitors Amazon AWS and Google Cloud's margins of 35% and 24%, respectively, which may exert some pressure on overall profitability.
- Investment Opportunity: Microsoft's expansion in the cloud computing sector presents a significant market opportunity, especially as demand for AI surges, leading enterprise clients to prefer renting data centers rather than building them, thus fueling Azure's rapid growth.
- Stock Market Performance Challenges: Despite Microsoft's stock price dropping 11% at the start of 2026, Azure's strong growth could help it outperform the market in the future, particularly as the broader market has only risen by 1%, providing Microsoft with a chance to regain its market position.
See More
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- Elevated Safety Standards: Waymo's VP Srikanth Thirumalai stated in an interview that the standards for autonomous driving should exceed human capabilities, emphasizing that safety is paramount, with future efforts focused on reducing sensor costs and improving software quality to ensure product safety.
- Sensor System Optimization: Currently, Waymo employs a comprehensive system with 29 cameras, 5 lidars, and 6 radars to enhance AI perception, planning to reduce the number of sensors in future robotaxi models while iterating and innovating to lower costs and improve software performance.
- Tesla's AI Perspective: Tesla's VP of AI, Ashok Elluswamy, emphasized at the ScaledML Conference that autonomous driving should rely on cameras rather than sensors, arguing that the challenge lies in AI capabilities rather than sensor technology, highlighting the importance of information extraction.
- Ongoing Industry Debate: Despite differing views on autonomous driving technology, both Waymo and Tesla acknowledge the challenges in achieving fully safe autonomous driving, indicating that the debate within the industry continues to evolve.
See More
