Alphabet stock has more upside as Google search still has advantages over ChatGPT, Bank of America says

• Alphabet has upside as Google still holds an edge in the search wars with ChatGPT and Bing, Bank of America said.

• Google web visits far outpace those of Bing and ChatGPT, even as the latter launches a new iPhone app.

• "ChatGPT is still unable to provide answers on current events or support external links like search, which we think are advantages for Google."

Alphabet stock still has room to run higher given the strength of Google in the search engine wars, Bank of America strategists wrote in a Monday note.

BofA reiterated its "buy" rating for the stock and said it could climb to $128 thanks to Google's dominance in online web visits, which were in the 2.6 billion-3 billion range in the week to May 17.

By comparison, Bing visits are down 11% month over month to 38.9 million, and ChatGPT's have dropped 5% to about 62.4 million.

And while user visits to Bard, Google's answer to ChatGPT, lag far behind at 6.6 million, they are still up 346% month over month.

BofA also downplayed ChatGPT's new iOS app that launched in the US on May 18, and garnered 710,000 downloads in the first three days. That's 2.7 times more than Google's US app, the strategists said.

But in BofA's view, Google still has the edge, and there's still no evidence ChatGPT is impacting Google's traffic.

"ChatGPT is still unable to provide answers on current events or support external links like search, which we think are advantages for Google," according to the note.

Separately, Samsung announced that its smartphones would stick with Google as the default for mobile search, which positions Alphabet well for continued dominance in the search space.

"We continue to view Google's search distribution as one of the three pillars (in addition to superior data and AI capabilities) for our call that AI integration will be incrementally positive for Google's market position," the strategists wrote.

Some market commentators have forecasted that AI could spur a productivity boom to the benefit of the global economy, and stocks in the sector have enjoyed a rally to start the year. Shares of Alphabet have climbed 41% year-to-date to about $125.

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