Alphabet's search engine rebounds as Gemini narrows AI perception gap

Mark Mahaney from Evercore ISI reported to CNBC that Alphabet has successfully reversed the search market losses it experienced during the first months of 2025 when OpenAI's ChatGPT gained traction. The recovery matters significantly because search underpins more than half of Alphabet's total revenue while delivering more than 70 percent of company profits, making it the business's central profit driver. The analyst noted that Alphabet's engineering teams have upgraded their flagship search capabilities to address competitive threats from OpenAI. On the AI agent front, consumer preference data now places Gemini approximately three percentage points behind ChatGPT, a meaningful narrowing of the gap that existed earlier. Mahaney pointed to three upcoming developments that could strengthen Alphabet's position: expanded Gemini Spark functionality, the planned release of Gemini 4 as a new generation model in late 2026, and increasing market penetration of Google's tensor processing units. Mahaney cautioned that the competitive landscape remains fluid and leadership in AI could still shift as other technology companies accelerate their research efforts.

1. Google regained search market share after losing ground to ChatGPT through early 2025
2. Search accounts for more than half of Alphabet revenue and more than 70% of profits according to Mahaney
3. Gemini is now estimated to be within about three percentage points of ChatGPT in consumer perception as AI agents
4. Google made enhancements to its core search offering in order to compete with OpenAI
5. Evercore expects next-generation Gemini 4 model launch later in 2026