Investment banking advisory firm Evercore believes Google (GOOGL) has now secured an edge in the AI race following the launch of Gemini 3.
In a new CNBC interview, Mark Mahaney, head of internet research at Evercore ISI, says the market misread Google six months ago and is now reassessing the strength of its fundamentals and AI positioning.
Mahaney says Google’s recent run has taken the valuation to a level where further multiple expansion may be limited, but he believes the company’s unique AI strategy can still drive long-term gains.
“Is it overbought here 29 times [earnings]? No, but I think it’s very hard to see a material rerating in the multiple, the multiple going materially higher from here.
But fundamentals look great for the company. And it’s this big, broad pitch they can make of that we’ve got the leading AI model. We’ve got the broadest way to monetize that of any company in the world. Oh, yeah. And we’ve got the lowest cost infrastructure because we’re vertically integrated up and down the tech stack. That’s a very powerful pitch. And so I think the stock is now a high-quality compounder.”
A high-quality compounder refers to a business that can generate sustained earnings growth and high returns on capital over a long arc of time.
While Mahaney is long-term bullish on GOOGL, he believes that there will be other winners in the AI boom. One player that he thinks will make big splashes in 2026 is OpenAI.
“It’s not winner-take-all. You’re going to have a couple of large winners… We haven’t heard from ChatGPT in a while, but we will. We’re going to get that billion DAU (daily active user) announcement or billion WAU announcement, or weekly average user announcement. I think that probably comes in the next two to three months.
And then I think it’s almost inevitable that ChatGPT, OpenAI, are going to launch an ad model next year that they may not call search, but it’s going to look like, feel like, smell like search. And it’s going to be a paid lead generation model that won’t impact Google’s revenue anytime soon, but that will give them a run for the money in the next, call it, two, three, four years. So ChatGPT is still out there. Let’s not forget that.”
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