In a noteworthy development, Google’s shares experienced a 5% surge on Thursday, fueled by the announcement of the company’s latest artificial intelligence model named Gemini. The cutting-edge AI model is set to compete head-to-head with products from industry heavyweights OpenAI, Microsoft, and Meta.
Google’s stock is poised for its most impressive day since August 29, reflecting the positive response from investors following the unveiling of Gemini. Wells Fargo’s trading desk commented that the announcement is likely to quell concerns surrounding Google’s position in the AI landscape, stating that Gemini has sparked optimism and is causing a pre-market boost for Google’s stock (GOOGL).
However, questions linger about the monetization strategy for Gemini. Wells Fargo’s trading desk acknowledged the significance of this aspect, summarizing that Google has proven it still holds a competitive edge in the AI domain.
Analysts at Bank of America underscored the pressure Alphabet has faced throughout the year regarding concerns over Google’s AI capabilities. They posit that a “well-branded,” competitive model like Gemini could yield positive outcomes for consumer search activity and Cloud enterprise sales.
While it remains uncertain how Google plans to monetize Gemini across its products in the long term, the company disclosed its initial step: licensing Gemini to customers through Google Cloud starting later this month.
Google executives asserted that Gemini outperforms OpenAI’s GPT-3.5 chatbot, positioning itself as a formidable player in the AI landscape. The company, however, did not provide a direct comparison with OpenAI’s latest model, GPT-4 Turbo. Nevertheless, Gemini signifies an opportunity for Google to further monetize AI.
Microsoft, a major player in the tech industry, recently launched Copilot, powered by OpenAI’s ChatGPT, embedded in Word, Excel, and other Office programs, priced at $30 per person per month. Analysts project Copilot could contribute over $10 billion in annualized revenue for Microsoft by 2026.
JPMorgan analysts noted that while Wall Street largely remained indifferent to the announcement, they are encouraged by Google’s progress in this major technology shift. However, they anticipate pushback over uncertainty surrounding the monetization path in Search.
According to the analysts at KeyBanc, Gemini represents the culmination of Google’s numerous AI announcements this year. They caution that meaningful impacts on growth and profitability may take time, emphasizing that Gemini is gradually integrating into core products like Search. The analysts advise patience, foreseeing that 2024 will be more about tangible results than headlines, as the tech giant navigates the evolving landscape of advertiser, consumer, developer, and enterprise behaviors.