Alphabet's stock surged 4% as Google announced new AI features, including an 'AI Mode' for U.S. users and a subscription service for AI power users. This alleviated investor worries about funding AI development costs. Analysts expressed confidence in Google's ability to continue growing its search business while enhancing monetization strategies through AI. CEO Sundar Pichai dismissed fears that generative AI would undermine traditional search, and predictions indicated that advertising revenue could benefit from improved AI responses.
After the conference, "we are incrementally confident that Google can deliver continued search growth while ramping monetization suggesting improving execution," Citi analyst Ronald Josey wrote in a note.
CEO Sundar Pichai said the rise of generative AI was not at the full expense of online search amid concerns about a behavioral change where users were turning to AI chatbots from search engines.
"We believe monetization of AI Mode is likely to 'soon' follow the U.S. launch," Josey said.
A Google search team executive also said using AI to answer tougher questions could open up new ways to show more relevant and useful ads.
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