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Google LLC (NASDAQ: GOOGL) shares jumped 5% yesterday when the tech giant announced a new artificial intelligence (AI) model it calls Gemini. Shares added $6.91 to close at $136.93. As of this writing, GOOGL has climbed slightly higher to $137.21. The company’s stock has also increased 55.20% year-to-date (YTD), and 47.51% over the last year, according to MarketWatch data.
The rise in Google shares from announcing Gemini puts the company solidly back in the AI race as observers had begun to wonder if Google had any further plans for the technology. According to analysts from Bank of America (NYSE: BAC), Google’s Gemini could improve the company’s share trajectory next year. In a recent note, the analysts said:
“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.”
Wells Fargo’s trading desk seems to agree with Bank of America, stating that announcing Gemini “should be enough to quiet down the where is GOOG on AI’ chatter”. It also posed a question about how Google intends to monetize Gemini.
Gemini is Google’s AI model designed to rival OpenAI’s GPT-3.5. Google says Gemini outperforms GPT 3.5 and comes in multiple variations for specific tasks and uses. These variations are Gemini Nano, Gemini Pro, and Gemini Ultra. Although Google touted Gemini, its use cases, and its performance, the company has no details on whether or not it can outperform OpenAI’s new GPT-4 Turbo.
Google says Gemini Ultra performs abundantly well in Massive Multitask Language Understanding (MMLU) and can outperform human experts in several disciplines, including history, medicine, math, law, ethics, and physics. It is also capable of understanding nuances and handling complex subjects.
Using Gemini Pro, developers and enterprises enjoy scalability that can be applied to all kinds of businesses to increase productivity and help them scale. Lastly, Gemini Nano caters to Android mobile developers, helping them develop Android applications.
According to JPMorgan analysts, the market “mostly yawned” at Google’s Gemini announcement. However, they are positive about the announcement and Google’s progress in AI. Nonetheless, the analysts suggest Google will face some problems caused by the lack of clarity with monetization.
“While it remains early, the Gemini launch represents significant innovation for Google as we enter year 2 of commercialized and widely distributed availability of Generative AI.”
OpenAI and Google are currently in an unofficial battle as the ChatGPT creator is trying to poach Google’s AI staff. OpenAI is allegedly offering compensation packages of up to $10 million to attract Google’s researchers. Reports suggest that OpenAI CEO Sam Altman has already made offers to AI researchers at Google.
Reportedly, most of the compensation would be in the form of stock. Reports also state that OpenAI might sell existing employees’ shares, valued between $80 billion and $90 billion, a move that might benefit researchers who join before the sale. In addition, OpenAI has published a vacancy for a research engineer position. Annual pay is between $245,000 and $450,000.
Alphabet’s efforts to integrate generative AI technology into more products have been noticeable since the launch of OpenAI’s ChatGPT chatbot late last year.
Alphabet Inc (NASDAQ: GOOGL), the parent company of Google, experienced a nearly 7% drop in its shares in pre-market trading to $129.39. This decline in Alphabet stock came as a surprise, especially after the tech giant reported an 11% increase in revenue for Q3 2023. The dip in share prices primarily stems from Alphabet’s cloud business falling short of analysts’ expectations.
For the third quarter this year, Alphabet reported Earnings Per Share of $1.55, surpassing the $1.45 per share that was expected by LSEG (formerly known as Refinitiv). The revenue for the quarter amounted to $76.69 billion, again exceeding the $75.97 billion predicted by LSEG. These figures signify a remarkable rebound in the advertising sector, pushing the company’s expansion into double digits for the first time in over a year.
However, it’s the numbers within Alphabet’s report that reveal the cause of concern. While YouTube advertising revenue exceeded expectations at $7.95 billion, Google Cloud revenue fell slightly short at $8.41 billion.
Despite this, the cloud unit still managed to grow by 22% compared to the same period the previous year, which was double the rate of expansion for the company as a whole. It is also notable that the cloud business turned an operating profit of $266 million, a significant improvement from the $440 million loss in the same period the year before.
Alphabet CEO Sundar Pichai emphasized that the cloud business remains a key area of investment for the company as it seeks to compete with Amazon Web Services and Microsoft Azure.
Ruth Porat, Alphabet’s finance chief, noted that cloud growth “remained strong across geographies, industries, and products”. However, the slower expansion rate was attributed to “customer optimization efforts”, a term commonly used to describe clients reducing their spending on cloud services.
With the increasing importance of generative Artificial Intelligence (AI), companies are turning to public cloud services to handle demanding workloads. While Alphabet’s cloud unit demonstrated growth, the market’s consensus suggests that it needs to become more profitable to satisfy investor expectations.
Alphabet’s efforts to integrate generative AI technology into more products have been noticeable since the launch of OpenAI’s ChatGPT chatbot late last year.
The company is currently testing generative AI technology within its core search, with the goal of providing more creative and comprehensive answers to text queries. The potential impact of this technology on Google’s search and advertising business is substantial, as it could change the way people seek information online.
Much of Alphabet’s year has been characterized by cost-cutting efforts after years of substantial growth. In January, the company announced a significant reduction in its workforce, affecting approximately 6% of its full-time employees. These measures were followed by additional layoffs within various business organizations, such as the news division and the self-driving car unit, Waymo.
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From a stock index perspective, Alphabet shares are among the best-performing equities with a gain of about 33% YTD.
Alphabet Inc (NASDAQ: GOOGL) shares have strongly rebounded from 2022 lows YTD. As a well-diversified tech company that has invested billions of dollars in different economic sectors, its stock market is well-poised to revisit its ATH and beyond. However, it is the artificial intelligence (AI) venture through one of its subsidiaries Google LLC that has convinced its shareholders to remain bullish. During this year’s Google annual I/O Developers conference held on Wednesday, it was evident that Alphabet is keen on AI development.
According to the latest market data provided by TradingView and MarketWatch, GOOGL shares gained approximately 11 percent in the past five days to trade around $116.63 during Thursday’s after-hours session. The recent gains materialized following a 4.32 percent pump on Thursday. Notably, GOOGL shares have ranged between 83.34 – 122.43 in the past 52 weeks with an average volume of about $38.46 million.
From a stock index perspective, Alphabet shares are among the best-performing equities with a gain of about 33 percent YTD.
“We remain bullish and view I/O as a clearing event that will help erode the heavily debated ‘AI overhang’ … and narrow GOOGL’s current valuation gap vs. peers,” Morgan Stanley analyst Brian Nowak wrote.
According to a study conducted by MarketWatch, 52 ratings gave GOOGL shares an average target price of 129.21 with an average recommendation of Buy.
For instance, a report on May 11 by JMP Securities issued a price target of $132.00 expecting GOOGL shares to rise within 12 months, which could mean a possible 13.24 percent upside from current levels. Other analysts from B of A Securities, and Citigroup have maintained their ratings Buy on Alphabet shares.
The American multinational technology conglomerate holding company is, however, expecting stiff competition from Microsoft Corporation (NASDAQ: MSFT), Meta Platforms Inc (NASDAQ: META), and OpenAI in the artificial intelligence (AI) sector.
Nevertheless, the company has continued to integrate its subsidiaries through AI and cloud computing. During the 2023 first quarter financial results, Sundar Pichai, CEO of Alphabet and Google, noted that the company’s cloud computing sector has attracted huge global momentum to assure future growth prospects.
“…With Search performing well and momentum in Cloud. We introduced important product updates anchored in deep computer science and AI. Our North Star is providing the most helpful answers for our users, and we see huge opportunities ahead, continuing our long track record of innovation,” Pichai noted.
The introduction of AI and cloud computing has helped Alphabet reduce expenses through workforce cuts.
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The GOOGL stock price took a beating as Alphabet’s search monopoly on Samsung smartphone handsets come under threat.
On Monday, April 17, Alphabet Inc (NASDAQ: GOOGL) stock tanked by 2.66% ending the trading at $105.97 levels. The selling pressure comes amid the news that Samsung is planning for a major overhaul of the default search engine on its devices. Over the last week, rumor mills have been strong that tech giant Samsung is looking to replace Google search with Microsoft‘s Bing as its default search engine. This development comes at a time when OpenAI’s chatbot ChatGPT has stormed the tech world with its potential prowess.
Microsoft is currently having an edge in the AI market considering its significant investment in OpenAI. It is clear that the two tech giants shall initiate a long-going battle in the AI space. Google is also making a push into the AI space. Last month, Google released early access to the ChatGPT rival Bard.
Every year, Google is paying millions of dollars to smartphone manufacturers in order to stay as the default search on their devices. Of course, with this move, Google mints billions of dollars in advertising revenue.
As per the New York Times report last Sunday, Samsung and Google’s deal is up for renewal, which could be an estimated $3 billion in revenue for Google. As we know that Samsung is a major manufacturer of Android handsets. Thus, the news that Samsung is reportedly looking for a switch took Google employees by a major surprise.
Over the last several years, Google has been grabbing a staggering 90% share of the search market. Due to this massive search dominance, Google is also in the middle of a strong battle with the US Department of Justice.
The DOJ has questioned several times regarding Google’s strategy of the pay-to-play model, while adding that paying to maintain as the default search engine has “harmful effects on competition and consumers.”
Over the last few years, Microsoft’s Bing has been languishing behind Google’s search, until recently, when the launch of OpenAI ChatGPT took the tech world by storm. The launch of Bing chat and ChatGPT together seems to provide a major wake-up to Google.
On the other hand, Samsung also enjoys an established partnership with Microsoft. Currently, all Samsung phones come pre-loaded with Microsoft Office apps.
It is not clear whether Microsoft is willing to pay Samsung as heavily as Google does. If so, this could lead to another bidding war between the two tech giants. On Monday, while the Alphabet stock entered a correction, Microsoft (NASDAQ: MSFT) stock registered 1% gains. The MSFT stock price is already up 20% year-to-date.
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Alphabet’s ad revenue from YouTube tanks by 2% against market expectations. The GOOGL stock price has slipped once again under $100 this year.
During the aftermarket trading session on Tuesday, October 24, shares of Alphabet (NASDAQ: GOOGL) dropped nearly 7% on weaker-than-expected Q3 2022 earnings.
The company’s revenue growth slowed to 6% from 41% a year ago as the company sees a major dip in online ad spending. This also turns out to be the weakest period of growth for the company since 2013. Alphabet’s earnings per share stood at $1.06 vs. the $1.25 expected. Also, the revenue stood at $69.09 billion vs. the $70.58 billion expected.
Surprisingly, YouTube ad revenue tanked 2% to $7.07 billion from $7.21 billion a year before. However, the analysts were expecting an increase of 3%. During the third quarter, the overall advertising revenue for Alphabet was $54.48 billion.
Dissecting the sector-wise performance, Philipp Schindler, chief business officer for Google, said that Alphabet saw a pullback in spending on search ads, especially in areas such as loans, insurance, mortgage, and cryptocurrencies.
In the aftermarket trading on Tuesday, the GOOGL stock price slipped under $100 to $97.60. So far, the lowest close for the year is $95.65 on Sept. 30. Alike other Big Tech companies, Alphabet has taken a massive beating on Wall Street. The GOOGL stock price is already down by 28% over the last year massively underperforming the Nasdaq.
One area where Google saw strong improvement was its cloud business. For the third quarter, Google Cloud brought revenue of $6.7 billion, more than analysts’ expectations. This is a notable increase from the $5 billion a year ago.
During Tuesday’s earnings call, Alphabet executives spoke about the major challenges that the company is facing. Alphabet CEO Sundar Pichai said that the company is “sharpening our focus on a clear set of product and business priorities”.
He further added that the company will be initiating some cost-cutting measures amid rising economic challenges and the foreseeable recession. Earlier in September, Pichai said that he wants to make the company 20% more effective. This would involve slashing jobs and product cuts.
Alphabet’s current headcount currently stands at 186,779 – up from 150,028 last year. However, Pichai added that during the fourth quarter, the headcount additions will be “significantly lower” as the company becomes “focused on moderating operating expense growth”.
“Our actions to slow the pace of hiring will become more apparent in 2023. Talent is the most precious resource,” added Pichai.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Alphabet recorded a revenue of $61.88 billion during the just-concluded quarter against $56.16 billion expected by analysts according to Refinitiv.
Alphabet Inc (NASDAQ: GOOGL) stock traded 4.02% higher in the pre-market to trade around $2,744. The spike has been attributed to the second-quarter earnings results that beat analysts’ expectations. Notably, in Q2 2021 Alphabet recorded a revenue of $61.88 billion during the just-concluded quarter against $56.16 billion expected by analysts according to Refinitiv. Additionally, the company earnings per share of $27.26 versus an estimate of $19.34 according to Refinitiv.
On the YouTube segment, the company received $7 billion against $6.37 billion according to an estimate by StreetAccount. The Google Cloud segment reported a revenue of $4.63 billion versus $4.40 billion expected by analysts according to a survey conducted by StreetAccount.
During the last three months of the first half of 2021, Alphabet’s traffic acquisition cost (TAC) came in at $10.93 billion against $9.74 expected by analysts according to StreetAccount.
Notably, the total Google ad revenue saw a spike of 69% year over year basis to $50.44 billion. According to Google’s chief business officer Philipp Schindler, the retail market was the driving factor in the second quarter’s success. Furthermore, the company noted that it has over 120 million retail televisions connected on its YouTube every month. The figure was further exaggerated by the Covid pandemic that put people at Thermo homes for more hours than usual.
GOOGL stock has significantly benefited from the ongoing coronavirus pandemic, with a 73% gain in the past year. According to market analytics provided by MarketWatch, GOOGL stock has added approximately 50.52%,11.83%, and 8.04% in the past seven months, three months, and one month respectively through Tuesday.
With a market capitalization of around $1.83 trillion, the company is well poised to capitalize on emerging opportunities in the coming quarters. Consequently, a continued bull market is in order.
Moreover, a study conducted by MarketWatch indicates GOOGL stock received an average rating of Buy from 45 ratings.
Notably, Alphabet chief financial officer Ruth Porat said she expects a “more muted tailwind to revenues in the third quarter.”
As a major contributor to cloud-based technology, the Alphabet stock market is well-positioned to keep on climbing as the demand keeps on rising. During the just-concluded quarter, the company noted that its net profit came in at $561 million.
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