Recent analysis from Bank of America Securities suggests that OpenAI’s ChatGPT is not poised to challenge Google’s position as the leader in the search engine industry. Sensor Tower data reveals that app downloads for ChatGPT and Microsoft Bing have experienced a slowdown in recent weeks, according to a note by BofA analyst Justin Post. The note highlights that ChatGPT downloads on iPhones in the U.S. saw a decline of 38% month over month in June. Similarly, Bing app downloads, which include a ChatGPT-based chatbot, also dropped by 38% in June. Despite these figures, Google’s search engine market share has slightly increased to over 92% year over year, as reported by SimilarWeb data. Microsoft’s Bing, which relies on OpenAI’s ChatGPT technology, experienced a 40 basis point decline annually, accounting for approximately 2.8% of the market.
Investment Risk for Google and Microsoft
The deceleration in attention towards ChatGPT and other large language models (LLMs) underscores the investment risk faced by companies like Google and Microsoft. These companies have invested billions of dollars into the notion that recent advancements in AI could lead to the creation of a next-generation search engine capable of dethroning the current market leader. Additionally, Google, Microsoft, and other tech giants like Nvidia have poured hundreds of millions into AI startups. However, if the adoption of ChatGPT is already slowing, it suggests that the technology may not pose a serious threat to Google’s search engine dominance. As a result, companies may need to explore alternative applications for LLMs, such as incorporating them into new advertiser tools, as suggested by the analysts.
Implications for Google’s Stock and Future Development
Bank of America analysts speculate that concerns regarding LLMs and their impact on Google search have shifted from market share risk to monetization risk. However, with Google’s search share appearing healthy, there may be less urgency for the integration of LLM (chat) results into commercial queries. The ChatGPT app was launched in May and is currently only available for iPhones. Bank of America analysts anticipate that the forthcoming release of an OpenAI app for Android could potentially boost adoption. In addition to the app and Bing search engine, users can access the ChatGPT chatbot through its website. Nevertheless, Bank of America estimates indicate that visits to ChatGPT have declined by approximately 11% on a monthly basis, with just over 51 million visitors per week. This number only represents around 2% of Google’s estimated web traffic.
In summary, despite the hype surrounding AI and ChatGPT, it appears unlikely that this technology will pose a significant challenge to Google’s dominance in the search engine market. The slowdown in ChatGPT adoption raises questions about the potential application of LLMs and emphasizes the investment risk faced by major players like Google and Microsoft. While ChatGPT may not revolutionize search engines, there may be opportunities to explore other uses for LLMs, such as developing new advertiser tools. As the industry continues to evolve, Google’s stock and future development may be influenced by the integration of LLMs into commercial queries and the release of the Android version of the ChatGPT app.
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