ChatGPT edges past 10% market share in June, search slips to 88.5%

Wells Fargo reports ChatGPT's global usage share surpassed 10% in June, gaining 80 basis points month-over-month, while traditional search, led by Google, declined to 88.5% (-90bps m/m), signifying a 6.6 percentage point year-to-date share loss for Google. Despite this market share shift, Google's overall usage growth remained stable, and its Gemini AI saw modest gains. Consequently, Wells Fargo forecasts an acceleration in Google's second-quarter search paid clicks growth to 3.5% year-over-year, up from 2% in Q1, indicating resilience in its core business amidst increasing AI adoption.

Analysis

According to a Wells Fargo analysis, the competitive landscape in search is evolving rapidly, with ChatGPT's global usage share surpassing 10% in June following an accelerated 80 basis point month-over-month gain. This trend has directly impacted traditional search platforms, primarily Google, which saw its market share decline by 90 basis points in June to 88.5%, contributing to a total year-to-date share loss of 6.6 percentage points. Despite this clear erosion of its market dominance, Google's underlying business metrics demonstrate notable resilience. The company's combined usage instances across its search and Gemini platforms maintained stable high single-digit year-over-year growth. Furthermore, this operational stability is expected to translate into improved financial performance, with Wells Fargo forecasting Google's Q2 paid clicks growth to accelerate to +3.5% year-over-year, up from a low of +2% in Q1. This presents a dual narrative: while Google's long-term monopolistic position faces a structural threat from generative AI adoption, its near-term monetization capabilities appear robust.

Key Decisions for Investors

• Investors should closely monitor the divergence between Google's declining search market share and its resilient paid click growth, as sustained share loss could eventually pressure monetization.
• The upcoming Q2 earnings report is a key catalyst; focus on whether paid clicks growth meets the forecasted acceleration to +3.5% y/y, which would signal near-term strength against competitive pressures.
• Given that Google's Gemini platform has captured only a marginal 0.7% usage share, its adoption rate is a critical long-term indicator to watch for assessing the company's ability to compete in the new AI-driven environment.