Alphabet’s recent performance has signaled a seismic shift in the AI landscape. Once perceived as falling behind OpenAI, Google’s parent company has leveraged the launch of Gemini 3 to reclaim its position as a dominant AI power, backed by a staggering $175 billion to $185 billion capital expenditure forecast for 2026.
The Gemini 3 Turning Point
Released on November 18, 2025, Gemini 3 has been the catalyst for Google’s “fresh conviction.” Unlike the cautious tone of 2024, Alphabet’s February 2026 earnings call highlighted a model that is now outperforming rivals in critical areas.
- User Surge: The Gemini app reached 750 million monthly active users (MAUs) by December 2025, a massive jump from 650 million in the previous quarter.
- Monetization: AI is no longer a research project. Google Cloud revenue surged 48% to $17.66 billion, driven by AI demand, with an order backlog hitting $240 billion.
- The “Apple Win”: Google’s deal to power Apple’s Siri with Gemini models has secured its distribution across 2.5 billion active devices, a major blow to OpenAI’s expansion strategy.
The OpenAI “Exposure” Crisis
While Alphabet’s stock has jumped roughly 36% over the past year, its rivals—and their partners—are facing a “valuation hangover” due to their heavy reliance on OpenAI.
| Company | Exposure to OpenAI | Stock Impact (since Oct 2025) |
| Microsoft | 27% stake; 45% of $625B backlog is OpenAI-tied | ▼ 20%+ |
| Oracle | $300B cloud contract with OpenAI | ▼ 49% |
| Alphabet | In-house tech; independent of OpenAI | ▲ 36% |
Investors have grown wary of the “hope-and-a-prayer” model of funding OpenAI, which reportedly lost $12 billion in a single quarter of 2025. In contrast, Google is seen as “spending into strength,” using its massive advertising and cloud cash cows to fund its $180 billion AI infrastructure buildout.
🚨 ChatGPT traffic has fallen -22% in the last 6 weeks, since the Gemini 3 launch.
7-day avg visitors has gone from ~203M to ~158M. Might be the holiday slump, but Gemini, their biggest consumer competitor, has remained flat and is now ~40% of ChatGPT.
Source: SimilarWeb. pic.twitter.com/lud3N6pRzK
— Deedy (@deedydas) January 6, 2026
Technical Breakdown: Gemini 3 vs. ChatGPT
Market data from early 2026 shows Google’s distribution advantage is finally eroding ChatGPT’s near-monopoly.
- Market Share Shift: ChatGPT’s dominance dropped from 87% in early 2025 to 64–68% by January 2026. Simultaneously, Gemini’s share surged from ~5% to nearly 21%.
- Reasoning Power: Gemini 3 “Deep Think” has recorded breakthrough scores on the ARC-AGI benchmark, narrowing the gap with human-level abstract reasoning.
- Efficiency: Google lowered its “Gemini serving unit costs” by 78% throughout 2025, making it more profitable to run than OpenAI’s models.
“If you are connected to OpenAI, you’re doubly not intriguing to people right now. Google has the hot hand.” — Eric Clark, Portfolio Manager, LOGO ETF
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