Shares of Google surged more than 5% on Thursday, following the announcement of its groundbreaking artificial intelligence model, Gemini. This new entrant in the AI arena is set to compete with established players like OpenAI, Microsoft, and Meta. With its impressive performance, Gemini has gained attention from investors, leading to the company’s best day in the stock market since August 29.
Wells Fargo’s trading desk acknowledged that the introduction of Gemini will put to rest the lingering doubts surrounding Google’s AI capabilities. This latest model is causing a significant positive impact on Google’s stock performance. The trading desk further noted that Google has proven its ability to innovate and remain a formidable force in the AI space.
Bank of America analysts highlighted that Google has faced scrutiny over its AI capabilities throughout the year. However, they believe that a competitive and well-branded model like Gemini could provide several advantages for Google’s consumer search activity and Cloud enterprise sales. The analysts also expressed optimism regarding Google’s strong AI capabilities, suggesting that this could drive positive results for the company in the first half of 2024.
The monetization strategy for Gemini remains uncertain, generating curiosity and some concerns among market analysts. While it is unclear if Google plans to monetize Gemini across all its products in the long run, the company intends to license the AI model to customers through Google Cloud later this month. This signifies the potential for further monetization through AI technologies.
Competing in the AI Market
Gemini’s superior performance was emphasized by Google executives, who claimed that it outperforms OpenAI’s GPT-3.5 chatbot. However, no direct comparison was provided against OpenAI’s latest model, GPT-4 Turbo. Nonetheless, Gemini’s launch indicates an opportunity for Google to enhance its AI-driven offerings. Microsoft’s recent launch of Copilot, powered by OpenAI’s ChatGPT, demonstrates the revenue-generating potential of AI, with analysts predicting it could bring in over $10 billion in annualized revenue for Microsoft by 2026.
Although the announcement of Gemini received a relatively muted response from Wall Street, JPMorgan analysts expressed their encouragement to see Google’s progress in the AI sector. They recognized the significant innovation captured in the Gemini launch, marking the second year of commercially available Generative AI. However, the analysts anticipate possible pushback due to uncertainties surrounding the monetization path in Search.
Patience for Long-term Impact
KeyBanc analysts view Gemini as the culmination point of Google’s various AI announcements throughout the year. However, they caution that it will take time for AI to have a meaningful influence on the company’s growth and profitability. The analysts advise patience in gauging the impact of Gemini on future estimates, citing the incorporation of the model into core products like Search as an ongoing process.
Google’s Gemini marks a significant step forward in the realm of artificial intelligence. The introduction of this powerful AI model has alleviated concerns about Google’s capabilities in the field and has reinvigorated confidence among investors. While questions surrounding monetization remain, Google’s strong AI capabilities and the potential for further integration into its products position the company for success. As Gemini continues to evolve, it holds the promise of driving Google’s growth and profitability in the future.
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