Shares in Alphabet (GOOGL) fell on Tuesday as investors digested the artificial intelligence news from the Google I/O conference for software developers. The event, which coincided with Microsoft’s Build conference in Seattle, failed to boost Google stock as Wall Street analysts had hoped, amid growing AI-driven competition in the core internet search business.
Key Announcements from Google I/O
Google announced a premium AI subscription service priced at $249.99 monthly, targeting business customers. This high-end search service, built around Google’s new Gemini 2.5 AI model, costs about $50 more than rival OpenAI’s premium service. The Gemini app now has 400 million monthly active users.
AI Mode in Search
The company also introduced ‘AI Mode,’ its newest generative AI-based search engine, available in the U.S. AI Mode provides chatbot-style search answers, prompting a conversation, and utilizes Google’s newest models for deeper topic exploration. It taps into Google’s datasets for real-time information and connects to other Google apps for personalized responses. Users can still opt for traditional search results if preferred.
Analyst Reactions
“We believe Google’s ‘total reimagining of search’ is taking shape as AI Mode integrates what have been somewhat disparate AI products,” said JPMorgan analyst Doug Anmuth in a report. However, Wall Street analysts continue to question the impact of AI Overviews and AI Mode on traditional search advertising business. “Net-net, we’d expect bears to walk away undeterred on the linear view that (ad) impression opportunities will decrease significantly,” said RBC Capital analyst Brad Erickson in a report.
Future Developments
Alphabet is set to host Google Marketing Live on Wednesday, focusing on the monetization of new AI products. The Google I/O event also featured ‘AI agents’ that perform autonomous, goal-driven tasks, including Project Mariner, Project Astra, Jules, and Deep Research. These developments come as Google stock was down about 12% in 2025 heading into the conference.
Stock Performance
On the stock market today, Google stock fell 1.5% to close near $164. Alphabet stock holds an IBD Composite Rating of 86 out of 99. The company maintains an Accumulation/Distribution Rating of B, indicating institutional ownership activity.
As Google continues to innovate in AI, the market remains cautious about the impact on its core business. The company’s efforts to integrate AI into its search functionality and other products are significant steps, but the financial implications remain a subject of debate among analysts.
