Wells Fargo expects that as ChatGPT enters the search advertising market, Google's market share and profit margins will be impacted.
Wells Fargo securities analyst Ken Gawrelski made a bold prediction in his latest report: ChatGPT will capture 30% of the global search advertising market by 2030, equivalent to approximately $100 billion in annual revenue.
This also means that OpenAI and Google will ultimately engage in a fierce battle in the search market. Wells Fargo predicts that the search advertising market will grow at a compound annual rate of 8% by the end of this decade, reaching $340 billion by 2030. ChatGPT's growth will primarily eat into Google's market share.
Currently, OpenAI's revenue still relies on subscription fees. In March this year, media reported citing sources that OpenAI expects its revenue to triple year-on-year to $12.7 billion. At the same time, the company predicts revenue of $125 billion in 2029 while also determining that it will not achieve positive cash flow before 2029.
Revenue Potential of Massive Free Users
As the latest development in the internet ecosystem, ChatGPT currently occupies nearly 8% of global search queries but has not yet directly impacted the search advertising market.
Gawrelski believes this situation is about to change. They expect OpenAI to integrate sponsored advertising into ChatGPT within the next 12 months. Currently, this popular AI tool has over 500 million weekly active users, but only 5% are paying users.
It is worth noting that in the leaked internal revenue forecast of OpenAI, they have already predicted $1 billion in "free user monetization revenue" in 2026. Undoubtedly, this refers to advertising revenue. In the same forecast, OpenAI only expects "free user monetization revenue" to be $25 billion in 2029.
Analysts noted that OpenAI recently hired digital advertising experts, including Meta's former executive Fidji Simo, and recent court documents also demonstrate the company's commercial ambitions in the second half of this year.
Wells Fargo estimates that by the end of 2025, ChatGPT's share in overall search volume will rise to about 17%, and approach one-third by 2030. The report also points out that advertising share growth will lag behind usage growth in the short term but will balance out by the end of the forecast period.
Regarding this, Gawrelski drew an analogy with TikTok's commercialization process, saying that the short-video leader also took considerable effort to match advertising revenue with platform usage time.
He noted: "In 2022, TikTok expanded its advertising scale, but with user usage time accounting for 30%, digital advertising share was only 8%. By 2024, TikTok's user usage time remains stable at 30%, but the advertising share gap has narrowed to 16%."
Currently, Google dominates over 90% of the search advertising market, but analysts expect this number to drop to around 60% by 2030.
Wells Fargo also warned that ChatGPT's entry into the search advertising field might suppress recent strong CPC ad (pay-per-click advertising) prices. For Google, a one-percentage-point drop in advertising prices could lead to a one-percentage-point decrease in earnings per share in the 2026 fiscal year.
Analysts pointed out several key catalysts that might accelerate ChatGPT's entry into the advertising market, including new distribution agreements with mobile manufacturers and further rulings in the US court's antitrust case against Google's search engine.
This article is from the WeChat public account "Cailian Social AI daily", authored by Shi Zhengcheng, and published with authorization from 36Kr.
