Alphabet’s latest artificial intelligence offering has Wall Street analysts maintaining their optimistic view of the stock. The company unveiled a suite of AI-powered tools at its Google IO developer conference, available via a $249.99 monthly subscription called ‘Google AI Ultra.’ This service includes higher usage limits, allowing users to access the full capability of Google’s large language model Gemini, as well as new initiatives like its AI filmmaking tool Flow and 30 terabytes of storage. The plan also includes a YouTube Premium subscription.
Analyst Reactions
The rollout comes as Alphabet races to further monetize AI products and services. Josh Woodward, Head of product incubator Google Labs and the Gemini app, labeled the suite as the ‘VIP pass for Google AI.’ Shares were marginally higher in premarket trading on Wednesday following the announcement.
Evercore ISI
Analyst Mark Mahaney maintained an outperform rating with a $205 per share price target, calling for more than 25% upside from Tuesday’s $163.98 close. ‘We don’t believe there will be only one AI winner, but we think Google has successfully proven that it will remain a leader in the AI race,’ Mahaney said, highlighting Google’s continued innovation and the success of AI Overviews in boosting search queries.
Morgan Stanley
Brian Nowak of Morgan Stanley, with an overweight rating and $185 per share price target, noted that the value of Google’s scaled first-party data and distribution is higher than ever. ‘We believe GOOGL I/O showcased how the company intends to leverage its leading user bases and distribution to drive next-generation, more personalized search and agentic experiences,’ Nowak said.
Bank of America
Justin Post of Bank of America, with a buy rating and $200 per share price target, suggested that Google’s race to catch up in large language models may be ending. ‘Given third-party benchmarks and slowing LLM innovation, we think the catch-up phase for Google’s LLM capabilities is coming to an end,’ Post said.
Mixed Views
Not all analysts were equally impressed. Andrew Boone of Citizens, with a market perform rating, expressed concerns that Google’s latest AI push doesn’t offset potential issues from antitrust troubles and declining search queries. ‘While we come away from I/O believing search is able to increasingly cover more queries and tasks, the monetization required of Google’s distribution contracts leads us to believe Google will continue to offer an inferior search product to ChatGPT’s,’ Boone said.
Citi and Goldman Sachs
Citi’s Ronald Josey and Goldman Sachs’ Eric Sheridan both maintained buy ratings, with price targets of $200 and $220 per share, respectively. Josey highlighted Google’s focus on personalizing user experiences, while Sheridan praised Alphabet’s long-term strategic positioning across various end-markets.
The varied analyst opinions reflect the complex landscape of Alphabet’s AI advancements and their potential impact on the company’s future performance.
