As Alphabet flexes its AI prowess, there's a 'new elephant in the room' for Google

Google's "obvious problem" is that demo versions of AI-powered search are less ad-heavy than traditional search.

A few months back, some on Wall Street were worried that Microsoft Corp.’s artificial-intelligence advancements would help the company eat into Alphabet Inc.’s dominant Google search business.

Those concerns may be soon fading, as “the investment community has rightfully determined that Google is in good shape around AI,” Barclays analyst Ross Sandler wrote in a note to clients Wednesday. But the search giant still faces other challenges as generative AI, the type of artificial intelligence popularized by ChatGPT, becomes more prominent.

“So the obvious problem” for Google is that mobile and desktop search engines powered by generative AI “are a complete departure” from the typical look of search, he continued. “Not only is the percentage of screen real estate dedicated to ads much lower, the entire layout and flow of the SERP appears to be changing in many cases.

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