Technology
Thursday, December 7th, 2023 4:48 pm EDT
Key Points
Stock Surge and Market Response:
Google’s stock experienced a notable increase of more than 5% after the company introduced its latest artificial intelligence model, Gemini. This surge marked Google’s best trading day since August 29. Wells Fargo’s trading desk observed positive reactions in the market, with sell-side notes reflecting optimism. The announcement was seen as addressing concerns about Google’s position in AI.
Monetization Uncertainty:
While the market responded positively to the Gemini announcement, there are lingering questions about Google’s monetization strategy for the new AI model. Wells Fargo’s trading desk highlighted the importance of understanding how Google plans to monetize Gemini, emphasizing that this aspect is a significant factor in assessing Google’s competitive strength.
Competitive Landscape and Potential Impact:
Analysts from Bank of America acknowledged that Alphabet, Google’s parent company, has faced pressure regarding its AI capabilities. They suggested that a well-branded and competitive model like Gemini could have positive effects on Google’s consumer search activity and Cloud enterprise sales. The article also discussed the competition with Microsoft’s Copilot, emphasizing the potential revenue impact and contrasting Google’s Gemini with OpenAI’s models. Despite positive sentiments, some analysts expressed caution, stating that the meaningful influence of AI on Google’s growth and profitability may take time, with patience advised in assessing its impact on various stakeholders.
Shares of Google surged over 5% following the announcement of its new artificial intelligence (AI) model, Gemini. The model is expected to compete with products from OpenAI, Microsoft, and Meta. This marks Google’s best trading day since August 29. Wells Fargo’s trading desk noted that the announcement is likely to address concerns about Google’s position in AI, and Gemini’s introduction is positively impacting Google’s stock.
While there is enthusiasm about Gemini, questions remain about Google’s monetization strategy for the new AI model. Analysts are interested in understanding how Google plans to generate revenue from Gemini, with a focus on the long-term monetization plan. Despite these questions, Wells Fargo’s trading desk sees Google’s announcement as evidence that the company still has a competitive edge.
Bank of America analysts expressed that Alphabet, Google’s parent company, has faced pressure regarding its AI capabilities this year. They believe a competitive and well-branded model like Gemini could have positive implications for Google’s consumer search activity and Cloud enterprise sales. The analysts suggested that Google’s strong AI capabilities, if confirmed, could be beneficial for the company’s shares in the first half of 2024.
Google plans to make Gemini available to customers through Google Cloud, starting later in the month. While Google executives claim that Gemini outperforms OpenAI’s GPT-3.5 chatbot, specific details on its comparison with OpenAI’s GPT-4 Turbo are not provided. The announcement indicates Google’s recognition of the potential to monetize AI, although the exact path and extent of monetization are still unclear.
Microsoft, a key competitor, recently launched Copilot, powered by OpenAI’s ChatGPT, integrated into various Office programs. Microsoft’s approach involves charging $30 per person per month for Copilot. Analysts anticipate Copilot could contribute over $10 billion in annualized revenue for Microsoft by 2026.
JPMorgan analysts noted that while Wall Street had a relatively muted response to the announcement, they are encouraged by Google’s progress in this significant technology shift. However, they acknowledge potential challenges related to uncertainty around the monetization path in Google Search.
KeyBanc analysts view Gemini as the culmination of Google’s AI announcements in the past year. They caution that meaningful impacts on growth and profitability may take time and advise patience in assessing the model’s influence on estimates. While they anticipate 2024 to be more about results than headlines, they see it as early innings in changing behaviors across advertisers, consumers, developers, and enterprises.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/07/google-shares-pop-after-company-announces-gemini-ai-model.html
