Alphabet stock surges as Google unveils new AI features

Alphabet’s stock is experiencing a significant rally as Google unveils an ambitious AI strategy that balances innovation with monetization. The company’s latest AI announcements are boosting investor confidence, particularly its nationwide rollout of “AI Mode” for search and a premium subscription model that addresses concerns about funding AI development costs. This represents a critical moment in Google’s evolution as it attempts to maintain search dominance while transitioning to an AI-first future.

The big picture: Google parent Alphabet saw its shares jump 4% on Thursday, continuing an upward trend as investors respond positively to the company’s artificial intelligence strategy unveiled at its developer conference.

• The stock reached $175.27, returning to price levels not seen in three months, though it remains down about 7% year-to-date.
• This marks the second consecutive day of stock gains following Google’s presentation of its AI roadmap.

Key details: Google has rolled out “AI Mode” to all U.S. users and introduced a $249.99 monthly subscription targeted at power users.

• The nationwide deployment of AI Mode for Google Search represents a significant evolution of the company’s core product.
• The premium subscription model helps address investor concerns about how Google will fund its massive AI development costs.

What they’re saying: CEO Sundar Pichai reassured investors that generative AI complements rather than replaces traditional search.

• Pichai directly addressed concerns about users potentially abandoning search engines in favor of AI chatbots.
• Citi analyst Ronald Josey wrote that the announcements made him “incrementally confident that Google can deliver continued search growth while ramping monetization.”

Behind the numbers: Google’s focus on integrating AI with search advertising suggests a strategic path to monetization.

• A Google search executive indicated that AI-powered answers to complex queries could create new opportunities for displaying relevant ads.
• This approach is particularly significant as advertising constitutes the majority of Google’s revenue.

Where we go from here: Analysts anticipate Google will soon begin monetizing AI Mode following its U.S. launch.

• Citi’s Josey specifically noted that monetization of the new AI features is likely to follow quickly after the nationwide rollout.
• How effectively Google balances user experience with revenue generation in its AI products will likely determine the company’s financial trajectory in coming quarters.