Investor anxiety over OpenAI’s competitive threat in the internet space has dominated investor discussions recently, but Mizuho argues that the narrative surrounding Alphabet could be poised for a recalibration as Google prepares to launch its next major AI model.
The firm’s analysts believe that ‘the imminent launch of Gemini 3 could further tip confidence towards Alphabet shares as the winner in AI, at least in the short term,’ aided by a stabilising trend in Google’s search activity and a growing commitment to its own AI tools.
Mizuho notes that browser-based usage data shows that ChatGPT’s momentum has cooled since the spring, with a slowdown in time spent per user on both desktop and mobile. Engagement with the app has also moderated, while global downloads are on track for another month of decline, according to third-party analytics cited in the report.
In this context, Gemini appears to be gaining ground, analysts said, with traffic and token processing trends pointing to expanding use across the Google ecosystem.
They also highlight that the market share of AI assistants has changed significantly since the end of 2024, with the combined share of GPT and Gemini increasing from 7% to 13%, and the most recent gains leaning towards Gemini as Google’s tools attract growing engagement.
‘The trend indicates widespread use of Google’s AI products in Search, Gemini, and other channels, which has grown and could continue to grow exponentially, driven by Google’s product ecosystem and, collectively, compete effectively with OpenAI,’ wrote Mizuho analysts led by Lloyd Walmsley.
Google’s AI Mode in Search helped search traffic growth return to positive territory in July, supporting early signs that Alphabet’s defensive strategy is working.
Recent data also shows that Gemini’s browser share is increasing, even as ChatGPT’s gains slow. Analysts said that ‘Google’s AI product likely gets the most exposure through AI Mode in the main search,’ making it a key component in stemming the loss of queries to AI assistants.
Gemini 3 is expected to deliver significant improvements in multimodality, reasoning, and automation. Mizuho highlights anticipated real-time video understanding, deeper context windows, and a new default reasoning mode, along with tighter integration with Workspace and an ‘Agent Mode’ capable of executing browser-level tasks.
Discussions among developers also suggest on-device AI and improved pairing with Google’s Veo 3.1 for video creation.
Analysts believe these improvements could help close the gap with OpenAI or even shift leadership in areas such as enterprise automation. While uncertainty remains around long-term competitive dynamics, the team sees room for concerns to ease as Alphabet implements its own advances in AI.
‘In the short term, our view is that Google continues to benefit from its core business fundamentals thanks to AI and is launching its own impressive AI product – most imminently Gemini 3 – which continues to swing the pendulum further towards being a winner in AI and less of a loser in AI,’ the analysts wrote.
Source: Investing.com
