Gene Munster Says AI Risk Is 'Still On The Table' For Google Despite Blowout Q2 Earnings, But Admits Search Was 'Strong' For Alphabet: 'Investors Will Likely Come Back'

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) may have delivered a blowout second quarter, but longtime tech analyst Gene Munster says its future still hinges on how it navigates the AI revolution.

What Happened: On Wednesday, Munster, managing partner at Deepwater Asset Management, took to X, formerly Twitter, following the earnings call.

"GOOG call is wrapped up. Message from management: Search is rock solid, and AI is working with new revenue opportunities down the road," he wrote.

Munster, who had been bearish on Google stock over concerns that AI could disrupt its dominance, added, "That risk is still on the table, but Search was so strong that investors will likely come back to the stock over the next few months."

See Also: Google Co-Founder Larry Page Predicted A Machine That Would ‘Understand Everything On The Web,’ Has That 25-Year Old Pipe Dream Finally Turned Into Reality?

Why It's Important: Alphabet reported second-quarter revenue of $96.43 billion and earnings of $2.31 per share, beating analyst expectations of $93.72 billion and $2.16, respectively.

Google Search brought in $54.19 billion in revenue, up from $48.51 billion year-over-year.

In April, during the tech giant's first-quarter earnings, Munster compared Google's crossroads to eBay's failure to adapt, warning that if the search giant doesn't evolve its results page and business model fast enough, it could face long-term stagnation—even amid short-term success.

Later in May, Munster warned that Alphabet's dominance in search is under threat due to an antitrust lawsuit and the rapid rise of generative AI, particularly OpenAI's ChatGPT.

He likened Google’s situation to Redbox's slow disruption and eventual decline, stressing that Google must quickly adapt and build a product users want while still being able to monetize it effectively.

Price Action: In after-hours trading, Alphabet Inc.’s Class A shares climbed 1.82% to $193.70, while Class C shares advanced 1.72% to $194.80, per Benzinga Pro data.

Benzinga's Edge Stock Rankings indicate that GOOG continues to show strong upward momentum over the short, medium and long term. More detailed performance metrics are available here.

Read next:

• Apple May See Fewer Searches In Safari, But Google CEO Sundar Pichai Insists AI Is Fueling Overall Query Growth: ‘Far From A Zero-Sum Game'

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.