Google’s AI-powered search overviews poised to boost revenue
Published: 16:34 18 Nov 2024 EST
Google’s introduction of AI overviews at the top of search results is a possible tailwind for the search giant as it faces new competitive threats, analysts at Bank of America believe.
Google introduced AI overviews at the top of search results, which offer concise responses to queries, in the US in May 2024.
It has since expanded this offering to more than 100 countries, which analysts see as suggesting “positive traction.”
However, they noted that as Google’s search share has grown since the launch of overviews in May, there has been limited change in Google's monthly US visits data.
They completed an analysis to gauge the potential impact of AI overviews on search revenues and costs.
“In our analysis, a 2.5% change in query volumes from the addition of AI capabilities (or new competition), combined with a 100 basis points change in ad clicks per search could drive approximately 6% to 8% impact on 2026 search revenue,” they wrote.
“We remain constructive that new AI search use cases can drive higher query volumes and ad clicks, while new competition is the biggest risk.”
Analysts repeated their ‘Buy’ rating on Alphabet Inc (NASDAQ:GOOG), Google’s parent company, noting they remain constructive on the AI opportunity for Google given the potential benefits to search usage and monetization, YouTube content and Cloud demand.
They have a $210 price target on Alphabet, which closed at $176.80 on Monday.
