Here's a simple investing rule from Evercore ISI analyst Mark Mahaney: if you own Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG), you own a search company. Everything else is a side dish.

Mahaney told CNBC that Google Search remains the key driver of Google's financial performance. Search accounts for more than half of company revenue and, by his estimate, more than 70% of profits.

His framing is blunt: "If there's a problem with Google Search, there's a problem with Google stock." He added that Google's search position "seems to be strengthening."

That makes Google's improving competitive position especially important for investors.

Google Regains Search Share

Mahaney said Google lost share as consumers increasingly turned to OpenAI's ChatGPT through early 2025. However, that trend has since reversed.

Google improved its core search product in response to rising competition, helping it regain share, he said.

The company also maintains a strong position in commercial searches, including queries tied to travel, restaurants and other purchase decisions. That supports Google's advertising business.

"The stronger the search position in the platform, the better the ad revenue," Mahaney said.

Evercore's research also shows Gemini narrowing the gap with ChatGPT. Mahaney said Gemini is now within roughly three percentage points of ChatGPT when consumers are asked about AI agents.

Still, he cautioned that leadership could shift again as Google and OpenAI continue improving their products.

Gemini, TPUs Could Drive Next Growth Cycle

Mahaney said Alphabet has several potential product catalysts ahead.

Google needs to strengthen its Gemini Spark offering, particularly as competition intensifies following Meta Platforms Inc.'s AI product launches. He also expects Google to introduce its next-generation Gemini 4 frontier model later this year.

Meanwhile, stronger adoption of Google's tensor processing units, or TPUs, could provide another growth driver.

Mahaney described those developments as three separate product cycles supporting Evercore's bullish view on Alphabet. The firm sees roughly 30% upside to its price target.

AI Safety Remains In Focus

Mahaney also said AI companies must maintain strong safeguards as their models become more powerful.

He said Google has generally taken a responsible approach to AI development and expects the company to maintain a safety-focused strategy as it introduces future Gemini products.

For Alphabet investors, however, search remains the central issue.

Mahaney said Google's improving competitive position suggests its most important profit engine remains intact even as generative AI reshapes how consumers find information online.

Analyst Outlook

Alphabet trades at a price-to-earnings ratio of about 17.6. Analysts have a strong buy consensus on the stock, with an average price forecast of $436.25.

Recent analyst actions include JPMorgan maintaining an Overweight rating while lowering its price forecast to $420 on July 23. TD Cowen maintained a Buy rating and $475 forecast the same day. Oppenheimer kept an Outperform rating while cutting its forecast to $400.

Top ETF Exposure

The Goldman Sachs Technology Opportunities ETF (NASDAQ) has a 9.20% weighting in GOOG. The iShares Global Comm Services ETF (NYSEARCA) has a 9.09% weighting, while the Principal Focused Blue Chip ETF (NASDAQ) has a 9.28% weighting.

Those sizable positions mean ETF inflows and outflows can also influence trading in Alphabet shares.

GOOG Stock Price Activity: Alphabet shares were trading higher by 0.59% at $352.94 during premarket trading on Tuesday, according to market data.