Dan Ives, a prominent analyst at Wedbush Securities, recently refuted claims about the demise of search engines, citing Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) as a prime example.
Alphabet's Q2 Results Underscore Search's Strength
Dismissing fears, Dan Ives stated, “The death of search is greatly exaggerated.” He highlighted Alphabet’s robust Q2 earnings and revenue, which exceeded analyst expectations, as evidence of the enduring strength of search.
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Alphabet's search engine business brought in $54.2 billion in sales, while its advertising revenue climbed 10% to $71.3 billion. “Alphabet continues to defy the bears, just like this last quarter, and all of our survey data shows that search continues to be pretty robust from a query perspective,” Ives told CNBC.
Despite recognizing AI as a potential short-term challenge for Google, Ives expressed confidence that the tech giant, along with competitors like Meta Platforms Inc. (NASDAQ:META), could leverage it into an advantage by learning how to monetize AI search.
Alphabet's AI Growth Meets Energy Demand Hurdles
Alphabet’s focus on AI is not new. In July, Alphabet CEO Sundar Pichai urged employees to increase their use of AI to boost productivity. This came as part of the company’s plans for $85 billion in capital expenditures for the year.
Alphabet’s AI features have also seen significant user engagement, with 2 billion users across products like Gmail, Android, and Docs. This indicates that Google’s AI integration is scaling rapidly. Goldman Sachs analyst Eric Sheridan maintained a Buy rating on Alphabet, highlighting the company’s strong momentum in Search, YouTube, and Cloud. He also noted Alphabet’s aggressive AI push.
In early August, Google announced agreements with regional grid operators to manage the increasing energy demand from AI, suggesting the company’s commitment to integrating AI into its operations and managing the associated challenges.
However, Ives warns that not all companies will emerge unscathed from the rise of AI search, with Barclays predicting that impairments will become more evident over time.
Benzinga’s Edge Rankings place Google in the 71st percentile for momentum and the 73rd percentile for growth, reflecting strong performance. Check the detailed report here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
