It’s been years since Google, the world’s dominant search engine, has felt genuine competition. As a result, its parent company, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), has been a market-beating investment for the past two decades.
However, a formidable foe has possibly arrived. The surging popularity of artificial intelligence (AI) chatbots like ChatGPT could threaten Alphabet’s gold mine.
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These concerns were already affecting the stock, and the sell-off intensified after trade tensions ratcheted up fear and volatility across Wall Street. Alphabet sits nearly 25% off its highs today, one of its steepest declines in recent years.
Is the stock a buy? The decline could be an excellent opportunity for long-term investors, but only if the underlying business is intact. It’s time to dive into the data to determine where the rubber meets the road.
Here is what you need to know.
Search engine ad revenue is over half of Alphabet’s business. In that light, the idea of tough competition is a scary one. According to data analysis site Semrush, ChatGPT saw 5.19 billion visits in February 2025. Yet, it is way too soon for Alphabet shareholders to panic. Google saw 139.9 billion visits in February, so it remains far ahead of its challenger.
Internet users have Googled things for over two decades. That’s some serious brand power, and it won’t evaporate overnight. Now, suppose ChatGPT keeps growing and begins to eat into Google’s market share. It still might not hurt Alphabet’s business as much as you fear.
Americans take the internet for granted, but a third of the global population still isn’t online. Google processes over 5 trillion searches annually, more than double what it did in 2016, the last time it published this data. And global spending on digital ads is still growing at a high single-digit rate. More internet users and digital ad dollars could mean Google and ChatGPT can both thrive, and each one might not grow at the other’s expense.
Ad revenue from Google Search rose 12.5% year over year in Alphabet’s 2024 fourth quarter, so this seems plausible thus far. Investors shouldn’t worry so much until there is a clear, sustained downtrend in Google Search’s performance.
Long-term investors have the superpower to look ahead five or 10 years (or longer), and Alphabet’s business might look drastically different then. Google Cloud is the world’s third-leading cloud platform and Alphabet’s fastest-growing business unit. Revenue increased by more than 29% year over year in the 2024 fourth quarter, and the runway is long.
Research by Mordor Intelligence estimates that the global cloud computing market will grow from about $790 billion in 2025 to $1.69 trillion by 2030. Modern software runs on the cloud. There was an existing growth trend as companies migrated to the cloud from on-premise servers, and now artificial intelligence has injected new life into it.
The further out you look, the more growth opportunities there are. Even today’s early-stage industries, like self-driving vehicles and humanoid robots, could mature over the next five to 10 years, and they will likely require massive computing resources to function at a worldwide level.
Google Cloud represented only about 12% of Alphabet’s revenue last quarter, but I think it will become increasingly important over the next decade. The market could be so focused on Google Search and ChatGPT that it overlooks the bigger story.
It will take time to see how these moving parts operate and how vulnerable Alphabet actually is to search engine competition. The good news is that the stock’s valuation seems to, at the very least, reflect any potential bad news. Its price-to-earnings ratio (P/E) is under 20 today, significantly less than its 10-year average:
GOOGL PE Ratio data by YCharts.
The steep decline in Alphabet’s valuation suggests that perhaps the market thinks it isn’t the great company it once was. Is the market right? I don’t think there’s nearly enough evidence, not while Google Search continues to grow. At the very least, Google Cloud’s growth could offset any eventual erosion in the search engine business.
Analysts also remain optimistic, estimating the company will grow earnings by an average of 16% annually over the long term. That’s plenty enough growth to justify buying a world-class technology stock like Alphabet at its current price.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
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