Google (GOOG, GOOGL) entered 2025 in a difficult position. Although the company's stock price rose 36% in 2024, Wall Street still perceived the company as second (or third) in the AI race behind OpenAI (OPAI.PVT).
Fast forward to today, while Google is in the headlines, OpenAI CEO Sam Altman declared a “Code Red” emergency as the company works to adapt to Google's latest Gemini 3 AI model. This is an interesting development considering that Google declared its own Code Red after ChatGPT hit the market in 2022.
Google is also catching up to OpenAI in the key monthly active users (MAU) metric.
Then there's the Google chip win. In October, Claude developer Anthropic (ANTH.PVT) announced it would expand its plans to use Google's AI chips, including using up to 1 million processors to power its AI software.
According to The Information, Google is also in talks to provide chips to Facebook and Instagram's parent company META to run its AI products.
All of this adds up to a strong 2025 for the search giant, setting it up for continued success in the year ahead.
Google stock rose in premarket trading Wednesday.
Google CEO Sundar Pichai addresses the crowd at Google's annual I/O developer conference in Mountain View, California on May 20, 2025. (Camille Cohen/AFP via Getty Images) ·Camille Cohen via Getty Images
“Google will be the top-performing Mag 7 stock in 2026,” Gene Munster, managing partner at Deepwater Asset Management, wrote in a Dec. 11 note to investors.
“Google is in the strongest position when it comes to a fully integrated AI stack,” he wrote. “Gemini is a leading model, its user base is growing faster than OpenAI, and search is reportedly becoming more effective at integrating AI and advertising. [Google Cloud Platform] It continues to maintain its position in the infrastructure construction cycle. ”
Google counts AI revenue as part of its Google Cloud Platform (GCP) business. According to the company, this has provided a major boost to GCP. Google announced that third-quarter GCP revenue increased 34% year-over-year to $15.1 billion. It rose 32% last quarter.
The number of new customers to GCP increased by 34%.
“Our complete enterprise AI product portfolio is accelerating revenue, operating income and backlog growth,” CEO Sundar Pichai said during the company's latest earnings call.
Pichai said Google signed more than $1 billion worth of deals in the third quarter, more than in the previous two years combined. He added that more than 70% of the company's existing cloud customers use its AI services.
An Android bot figure, the mascot for Google's Android operating system, holds a balloon in the shape of the Gemini AI logo. (Joanne Cross/NurPhoto via Getty Images) ·NurPhoto (from Getty Images)
The company also tied its AI capabilities deeper into Google Search, launching a ChatGPT-like AI mode for all US users at the Google I/O conference in May and dropping ads in the AI overview of Search.
Google also managed to gain support from social media users with its Nano Banana AI imaging app, which went viral in August. Then came the biggest bomb, Gemini 3.
Gemini 3 was announced in November and quickly garnered praise from users. That includes Salesforce CEO Marc Benioff, who said he would retire ChatGPT after using the app for Gemini 3.
Gemini 3 shocked the AI industry, dethroning GPT-5.1 as the leading AI model across several categories.
Google's user base is also growing. According to TD Cowen's John Blackledge, a survey of approximately 2,500 U.S. consumers found that Gemini's MAU penetration increased faster than ChatGPT from July to October.
Gemini's MAU penetration rose from 24% in July to 26% in October. Google's AI mode also improved from 18% to 19%. However, ChatGPT's MAU penetration rate decreased from 36% to 35% over the same period.
Both apps continue to see strong growth, with global MAUs increasing by 180% and 125% for ChatGPT and Gemini, respectively, according to market intelligence firm Sensor Tower. However, similar to TD Cowen, Sensor Tower found that ChatGPT's MAUs increased by approximately 15% between August and December. Gemini rose 30%, thanks in part to image editing app Nano Banana.
It doesn't hurt that Gemini is also available on all new Android devices, so it's much easier to access than ChatGPT, which requires users to go to a website or download the ChatGPT app.
AI will not be the only bright spot for Google in 2025. The company lost its second antitrust case in April, with a judge finding it had an illegal monopoly through its online advertising business, but the legal problems weren't all bad.
In September, a judge ruled that Google had an illegal monopoly in the search market and refused to force Google to abandon its Chrome browser.
A Waymo vehicle waits at an intersection in San Francisco on October 22, 2025. (AP Photo/Jeff Chiu) ·Related news organizations
The judge also allowed Google to continue paying “distribution partners to preload or feature Google Search, Chrome, or GenAI products.”
That means the company can continue to pay Apple more than $20 billion a year to make Google Search the default search option on iPhones and other devices.
Beyond the legal drama, Google has made great strides with its self-driving car company Waymo. The company has expanded its coverage to other cities, including Miami, Dallas, Houston, San Antonio, and Orlando, and has begun offering freeway driving around San Francisco, Los Angeles, and Phoenix.
Google also showed off prototype smart glasses and Samsung's new VR headset. Both use software based on a version of Android called Android XR developed by Google and Samsung.
Expect more in 2026.
Sign up for Yahoo Finance's Week in Tech newsletter. ·Yahoo Finance
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter @Daniel Howley.
Click here for the latest earnings report and analysis, earnings whispers and expectations, and company earnings news.
Read the latest financial and business news from Yahoo FinanSe.
