Google (GOOG, GOOGL) finds itself in a strong position as it navigates 2025, having emerged from a challenging 2024 when its stock price rose 36%. Despite this uptick, the tech giant was often viewed as trailing behind OpenAI (OPAI.PVT) in the artificial intelligence race. Fast-forward to today, and Google has captured significant market attention, challenging OpenAI as its CEO, Sam Altman, declared a “code red” emergency in response to Google’s advancements with its Gemini 3 AI models. This situation is a notable reversal from 2022 when Google itself issued a code red following the launch of ChatGPT.
Moreover, Google is steadily closing the gap with OpenAI in terms of monthly active users (MAU). October saw Claude developer Anthropic (ANTH.PVT) announce plans to expand its use of Google’s AI chips, committing to utilize up to 1 million processors for its software. In addition, reports indicate that Google is in discussions to supply its chips to Meta (META), the parent company of Facebook and Instagram, to support its AI initiatives.
This surge in accomplishments has laid a solid foundation for Google as it approaches further success in the coming year. Gene Munster, managing partner of Deepwater Asset Management, highlighted Google’s potential in his December 11 investor note, stating, “Google will be the best performing Mag 7 stock in CY26.” He praised the company’s fully integrated AI stack, noting the leading capabilities of Gemini, its rapidly expanding user base, and the effective integration of AI into its search and advertising functions. Furthermore, he pointed out that Google Cloud Platform (GCP) continues to hold its ground amidst the ongoing infrastructure buildout cycle.
In the third quarter, Google reported a remarkable 34% year-over-year increase in GCP revenue, reaching $15.1 billion, following a 32% rise in the previous quarter. Notably, the number of new customers utilizing GCP surged by 34%. During the latest earnings call, CEO Sundar Pichai expressed confidence, stating, “Our complete enterprise AI product portfolio is accelerating growth in revenue, operating margins, and backlog.” He revealed that Google secured more contracts exceeding $1 billion in the third quarter than in the previous two years combined, with over 70% of its existing cloud customers adopting its AI services.
Google’s advancements are not confined to its cloud services. Throughout 2025, the company has integrated its AI capabilities into Google Search, launching a ChatGPT-like AI mode for U.S. users in May during its annual I/O conference. This included the introduction of ads into AI Overviews in search results. The company also gained traction among social media users with its Nano Banana AI image app, which went viral in August. The crowning achievement came with the announcement of Gemini 3 in November, which received accolades from industry leaders, including Salesforce CEO Marc Benioff, who noted he was transitioning from ChatGPT to Gemini 3.
Gemini 3 has made waves in the AI sector, dethroning GPT-5.1 as the top AI model across various assessments. Latest research from TD Cowen indicates that Gemini’s MAU penetration grew from 24% in July to 26% in October, while ChatGPT’s MAU penetration declined from 36% to 35% during the same period. Market intelligence firm Sensor Tower revealed that both applications have experienced substantial growth, with ChatGPT’s global MAU climbing 180% and Gemini’s by 125%. However, ChatGPT’s growth rate slowed to roughly 15% between August and December, while Gemini increased by 30%, aided by the popularity of the Nano Banana app.
Accessibility has also played a role in Gemini’s success, as it is available on all newer Android devices, contrasting with ChatGPT, which requires users to navigate a website or download its app. While Google’s achievements in AI are notable, the company has navigated a mixed legal landscape in 2025. Despite losing a second antitrust case in April, with a ruling that affirmed its monopoly in online advertising, a September decision allowed Google to retain its Chrome browser, citing its legal standing in the search market.
The court also ruled that Google could continue compensated arrangements with distribution partners for preloading its services, which includes annual payments exceeding $20 billion to Apple for making Google Search the default on its devices. Beyond its legal challenges, Google has made significant progress with its self-driving car initiative, Waymo, expanding its operations to cities such as Miami, Dallas, Houston, San Antonio, and Orlando, while also enhancing its freeway driving capabilities in regions like San Francisco, Los Angeles, and Phoenix.
As the year progresses, Google is set to unveil innovations, including prototype smart glasses and a new Samsung VR headset, both utilizing software based on Android XR, developed in collaboration with Samsung. These advancements signal a promising trajectory for Google as it heads into 2026, highlighting its commitment to remaining at the forefront of technological innovation.
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