Alphabet’s shares rose for the second consecutive day, gaining 4% on Thursday as investors reacted positively to the company’s latest artificial intelligence updates. The Google parent company announced the rollout of ‘AI Mode’ to all its U.S. users, a feature that integrates AI into Google Search. Additionally, Alphabet teased a $249.99 monthly subscription for its AI power users during its annual developer conference, helping to alleviate concerns about the high costs associated with AI development.
Citi analyst Ronald Josey expressed increased confidence in Google’s ability to maintain search growth while enhancing monetization strategies. ‘We are incrementally confident that Google can deliver continued search growth while ramping monetization suggesting improving execution,’ Josey wrote in a note.
CEO Sundar Pichai addressed concerns that the rise of generative AI might come at the expense of online search. He emphasized that the growth of AI was not necessarily at the expense of search engines, as users continue to rely on both AI chatbots and traditional search methods.
The introduction of ‘AI Mode’ allows U.S. customers to switch Google Search into a more AI-driven mode. A Google search team executive suggested that using AI to answer complex queries could lead to new opportunities for displaying more relevant and useful advertisements. Advertising remains the primary source of revenue for Google.
‘We believe monetization of AI Mode is likely to ‘soon’ follow the U.S. launch,’ Josey added. Alphabet’s Class C shares were up 4% at $175.27, reaching levels not seen in three months. Despite the recent gain, the stock remains down approximately 7% for the year to date.
