Shares of Google closed up 5% Thursday, a day after the company announced its latest artificial intelligence model called Gemini that will compete with products from OpenAI, Microsoft and Meta.
The stock is on pace for its best day since Aug. 29. Wells Fargo’s trading desk said the announcement “should be enough to quiet down the ‘where is GOOG on AI’ chatter” and that Gemini “is clearly causing a pre-mkt bid to GOOGL this morning as sell side notes read positive.”
But Wells Fargo’s trading desk also said the big question is what Google’s monetization for Gemini looks like. “In short, I’d summarize GOOG as proving that they still have some bite.”
Analysts at Bank of America said Wednesday that Alphabet has been under pressure from concerns over Google’s AI capabilities this year, so a “well-branded,” competitive model could have upsides for its consumer search activity and Cloud enterprise sales.
“We think Google has strong AI capabilities, and data suggesting that Google has best in class, proprietary, AI capabilities can be positive for the shares in 1H’24,” the analysts wrote in a note.
It’s still unclear whether Google plans to monetize Gemini through all of its products in the long term, though it will start by licensing Gemini to customers through Google Cloud later this month.
Google executives said Gemini outperforms OpenAI’s GPT-3.5 chatbot, but the company didn’t share how it compares with OpenAI’s latest model GPT-4 Turbo. Still, Gemini shows there’s an opportunity to further monetize AI.
Microsoft, for example, recently launched Copilot, powered by OpenAI’s ChatGPT, which is embedded in Word, Excel and other Office programs and will cost $30 per person per month. Piper Sandler analysts said in October that Copilot could add up to more than $10 billion in annualized revenue for Microsoft by 2026.
JPMorgan analysts wrote that while Wall Street “mostly yawned” at the announcement Wednesday, they are “encouraged” to see Google’s progress in “this major…
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