Worries that artificial intelligence will undercut Google-parent Alphabet's core internet search advertising business faded on Friday amid rosy management commentary on AI Overviews, a new format. Google stock climbed on Friday on better-than-expected first quarter earnings.
The emergence of generative AI and competition from OpenAI's ChatGPT forced Google to overhaul its search results. ChatGPT delivers answers to search queries, while Google's business model has been based on providing web links.
Further, Google began deploying AI Overviews in the U.S. in mid-2024, with conversational summaries topping links for many search queries. The AI Overviews system uses Google's in-house Gemini AI model.
Also, Google's Q1 internet search-advertising revenue came in at $50.7 billion, up 10%, vs. estimates of $50.4 billion.
"AI Overview commentary was arguably the best pushback to the bear case to date with AI Overviews now rolled out to 1.5 billion monthly active users," said Brad Erikson, an RBC Capital analyst, in a report.
Google Stock: AI Overviews
"One quarter won't change the bears' mind, but it's conceivable that AI Overviews is rolling out fast enough already to offset the conversion headwinds from legacy search with the company emphasizing it's seeing strong incremental commercial queries/engagement," Erikson said.
William Blair analyst Ralph Schackart also holds an upbeat view. He noted that AI Overviews is available in more than 15 languages across 140 countries.
"The total volume of search queries is increasing and AI overviews are monetizing at roughly the same rate (as legacy search)," he said in a report. "Businesses that are using now have an average 26% year-over-year increase in conversions for goals such as purchases and leads."
Still, competition is growing.
OpenAI claims that it now serves 400 million weekly active consumer users, up from 300 million in December 2024.
On the Q1 earnings call with analysts, management made a strong case that it's strategy is working, said JPMorgan analyst Doug Anmuth in a report.
"Management emphasized Google's unique full stack approach to AI across infrastructure, world class research, and products/platforms," he said. "AI Overviews continues to drive higher satisfaction and usage, and monetizes at approximately the same rate as other searches."
AI Model Competition
Anmuth added that "AI mode," which allows Google users to choose what search format they want, also seems to be jelling.
On the stock market today, Google stock rose more than 1% to 162.08. With the gain, Alphabet stock has retreated 14% in 2025.
Also, Google is competing with OpenAI, Anthropic, Facebook-parent Meta Platforms and many others in building new AI training models. In March, Google unveiled its newest artificial intelligence model, Gemini 2.5. Early reviews have been positive.
"Google is in a race vs OpenAI, Perplexity and others to drive AI usage, and we continue to believe Google has data and distribution advantages and has closed the large language model performance gap," said Bank of America analyst Justin Post in a report on Friday.
"Google highlighted significant AI Overviews expansion in search and strong adoption is driving an increase in commercial queries. The strong Q1 search performance, along with constructive comments on Gemini performance and AI Overviews adoption could help alleviate some investor concerns on AI competition."
Google Stock Technical Ratings
Alphabet stock holds an IBD Composite Rating of 80 out of a best-possible 99, according to IBD Stock Checkup.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Google is among AI stocks to watch.
Google stock holds an Accumulation/Distribution Rating of E. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
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