August 10, 2022

Chart shows Google is still beating Amazon in a key area of e-commerce

  • Amazon might be the largest e-commerce retailer in the world, but Google is still top of the funnel when consumers are doing their research, according to a new survey.
  • The findings have analysts optimistic for Google’s potential in e-commerce, a space it’s been playing catch-up in for many years.
  • Morgan Stanley analysts also reveal three other reasons they’re bullish on Google: YouTube, Cloud, and a travel sector set for recovery.
  • Visit Business Insider’s homepage for more stories.

A top Wall Street analyst recently said Google had become less relevant in e-commerce since the pandemic – but new research shows that Google is still the dominant player in one key area of online spending.

Morgan Stanley analysts conducted a survey of US consumers with AlphaWise and discovered that 50% of people researching products are still visiting Google and YouTube first, compared to 26% who prioritize Amazon. 

The survey also found that when it comes to comparing prices online, nearly one in three people are still turning to Google. Even when consumers know exactly what product they want, almost one in five will still turn to Google before anyone else.

Morgan Stanley’s analysts see this as a huge opportunity for Google’s business heading into the holiday season and beyond, raising the firm’s target price to $1,800 from $1760 with an overweight rating.

“We see this consumer searching behavior and strong e-commerce as tailwinds to Google’s recovery through ‘shelter-in holiday’.”

Morgan Stanley GOOGL ecommerce note

AlphaWise/Morgan Stanley

With the pandemic giving a huge boost to online spending, analysts believe Google is still playing catch-up in the e-commerce space.

Google CEO Sundar Pichai has attempted to allay those fears during the company’s last earnings call, stating there will be a “long-term focused effort on shopping.”

To aid that effort, Google reshuffled some of its management earlier this year, placing Prabhakar Raghavan as a central leader over its shopping, ads, and search businesses. It also hired ex-PayPal Chief Operating Officer Bill Ready as its new commerce chief in January.

But it’s not only e-commerce that has Morgan Stanley analysts bullish about Google right now. In the same note, the analysts laid out three other reasons they’re optimistic for Alphabet’s future.

One of those is YouTube, whose revenues Google has started to disclose. Morgan Stanley analysts believe the quarterly disclosures and expectations of around 30% growth in the next two years will only be a good thing for investors.

Secondly, they estimate 12% of Google’s ad revenue currently comes from travel, a sector that has been hard hit by the pandemic. This, the analysts say, offers a “unique way” for investors to invest in travel recovery,

Finally, they’re optimistic about Google Cloud, which is showing no signs of slowing down after bringing in $3 billion in revenue last quarter.

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