Thursday saw a 5% increase in Google’s stock price, one day after the company unveiled Gemini, a new AI model that will take on rival offerings from Microsoft, OpenAI, and Meta.
The stock is expected to have its highest day since August 29. Gemini “is definitely causing a pre-mkt bid to GOOGL this morning as sell side notes read favourable,” according to Wells Fargo’s trading desk, which also stated that the announcement “should be enough to quiet down the ‘where is GOOG on AI’ talk.”
The key question, according to Wells Fargo’s trading staff, is how Google plans to monetize Gemini. “GOOG is evidence that they still have some bite,” to put it succinctly.
A “well-branded,” competitive approach may benefit Alphabet’s consumer search activity and Cloud enterprise sales, according to analysts at Bank of America on Wednesday. Alphabet has been under pressure this year due to worries over Google’s AI capabilities.
“Data suggesting that Google has best in class, proprietary AI capabilities can be beneficial for the shares in 1H′24,” the analysts wrote in a note. “We think Google has strong AI capabilities.”
Long-term intentions to monetise Gemini across all of Google’s products are yet unknown, but later this month, the company will begin licencing Gemini to users through Google Cloud.
Though the business did not disclose a comparison with OpenAI’s most recent model, the GPT-4 Turbo, Google executives said that Gemini beats the company’s GPT-3.5 chatbot. However, Gemini indicates that there is potential for additional AI monetization.
For instance, Microsoft just released Copilot, which is integrated into Word, Excel, and other Office applications and costs $30 per person per month. Copilot is powered by OpenAI’s ChatGPT. By 2026, Copilot might provide Microsoft an annualised revenue of more than $10 billion, according to Piper Sandler analysts in October.
The news on Wednesday “largely yawned” on Wall Street, but JPMorgan analysts expressed their encouragement at Google’s efforts in “this major technology transition.” There will be opposition, they acknowledge, because to “uncertainty surrounding the monetization path in Search.”
Source (CNBC)
