Google started the year behind in the AI race. It ended 2025 on top.
- - Google started the year behind in the AI race. It ended 2025 on top.
Daniel HowleyDecember 23, 2025 at 11:03 PM
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Google (GOOG, GOOGL) entered 2025 in a difficult position. While its stock price rose 36% in 2024, the company was still largely perceived by Wall Street as playing second (or third) fiddle to OpenAI (OPAI.PVT) in the AI race.
Fast-forward to today, and Google is stealing the show, while OpenAI CEO Sam Altman has declared a "code red" emergency as the company works to match Google's latest Gemini 3 AI models. It's an interesting twist, given 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 user (MAU) metric.
Then there are Google chip wins. In October, Claude developer Anthropic (ANTH.PVT) announced it was expanding its plan to use Google's AI chips, including using up to 1 million processors, to power its AI software.
Google is also in talks to provide its chips to Facebook and Instagram parent company Meta (META) to run its AI products, according to The Information.
It all added up to a strong 2025 for the search giant, setting it up for continued success in the year ahead.
Google CEO Sundar Pichai addresses the crowd during Google's annual I/O developers conference in Mountain View, Calif., on May 20, 2025. (Camille Cohen/AFP via Getty Images) (CAMILLE COHEN via Getty Images)
"Google will be the best performing Mag 7 stock in CY26," Deepwater Asset Management managing partner Gene Munster wrote in a Dec. 11 investor note.
"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 expanding faster than OpenAI's, Search is integrating AI effectively with ads reportedly on the way, and [Google Cloud Platform] continues to hold its ground in the infrastructure buildout cycle."
Google's AI wins pile up
Google counts its AI revenue as part of its Google Cloud Platform (GCP) business. According to the company, that has given GCP a significant boost. In Q3, Google said its GCP revenue grew 34% year over year to $15.1 billion. It rose 32% in the prior quarter.
The number of new customers to the GCP jumped 34%.
"Our complete enterprise AI product portfolio is accelerating growth in revenue, operating margins, and backlog,” CEO Sundar Pichai said during the company's latest earnings call.
According to Pichai, Google signed more deals worth more than $1 billion in its third quarter than it did in the previous two years combined. More than 70% of the company's existing cloud customers are using its AI services, he added.
A figure of the Android Bot, the mascot of Google's Android operating system, holds a balloon in the shape of the Gemini AI logo. (Joan Cros/NurPhoto via Getty Images) (NurPhoto via Getty Images)
The company has also more deeply intertwined its AI capabilities with Google Search, launching its ChatGPT-like AI Mode for all US users in May at the Google I/O conference and dropping ads into AI Overviews in search.
Google has also managed to win over social media users with its Nano Banana AI image app, which went viral in August. Then came the biggest bomb: Gemini 3.
Announced in November, Gemini 3 immediately won praise from users, including Salesforce CEO Marc Benioff, who said he was ditching ChatGPT after using the app for Gemini 3.
Gemini 3 sent shockwaves through the AI industry, unseating 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 roughly 2,500 US consumers found that Gemini's MAU penetration ramped faster than ChatGPT's from July to October.
Gemini MAU penetration was 24% in July and climbed to 26% in October. Google's AI Mode also improved from 18% to 19%. ChatGPT, however, saw its MAU penetration decline from 36% to 35% in the same time period.
Market intelligence firm Sensor Tower says that both apps continue to see significant growth, with global MAU up 180% and 125% for ChatGPT and Gemini, respectively. But like TD Cowen, Sensor Tower found that ChatGPT's MAU grew roughly 15% between August and December. Gemini was up 30%, thanks in part to its Nano Banana image editing app.
It doesn't hurt that Gemini is also available on all newer Android devices, making it far easier to access than ChatGPT, which requires users to navigate to a website or download the ChatGPT app.
Google's other beats
AI wasn't the only bright spot for Google in 2025. While the company lost its second antitrust case in April, with a judge finding it holds an illegal monopoly through its online advertising business, its legal issues weren't all bad.
In September, a judge declined to force Google to give up its Chrome browser after he found the company holds an illegal monopoly over the search market.
Waymo vehicles wait at an intersection in San Francisco, on Oct. 22, 2025. (AP Photo/Jeff Chiu) ()
The judge also allowed Google to continue to make payments to "distribution partners for preloading or placement of Google Search, Chrome, or GenAI products."
That means the company can continue to pay Apple upwards of $20 billion a year to make Google Search the default search option on its iPhone and other devices.
Outside of its legal dramas, Google has also made major strides with self-driving car company Waymo. The firm expanded its availability to other cities — including Miami, Dallas, Houston, San Antonio, and Orlando — and began offering freeway driving around San Francisco, Los Angeles, and Phoenix.
Google also showed off its prototype smart glasses and a new Samsung VR headset, both of which use software based on a version of Android called Android XR, which was developed by Google and Samsung.
Look for that and more in 2026.
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