Alphabet’s annual developer conference, Google I/O, impressed analysts at Oppenheimer enough to earn the company an 'Outperform' rating and a price target of $145.
The May 10 event focused on how the company is integrating artificial intelligence into its products.
“Based on the about 3% increase in the stock from the start of the event, we believe the presentation largely quelled near-term investor angst over the lack of AI innovation vs. MSFT/OpenAI,” analysts said.
“While some GenAI capabilities shown were similar to features offered by ChatGPT, management showcased integration into Search, while keeping blue links relevant.”
US consumers can now access a beta version of a revamped Search that incorporates generative AI answers with follow-up questions, the note said. Blue links refer to publisher links, meaning there is limited risk that ad business will be disrupted.
“We continue to believe Google Search volume has been uninterrupted by ChatGPT, with The Information reporting that MSFT is dissatisfied with the lack of Bing share gain, further supporting our bullish thesis on GOOG,” they added.
That matters, even if Alphabet’s own Bard generative AI isn’t on ChatGPT’s level yet.
Moving forward, Google Cloud Platform laid out a three-pronged AI approach: build leading infrastructure, leverage proprietary large language models and integrate AI into productivity apps.
The “strategy is fundamentally sound, mirroring MSFT's approach, albeit on a different scale compared to Office, while reinforcing Google's position on the shortlist of [artificial general intelligence] leaders.”
Shares of Alphabet climbed more than 4% Thursday to $116.90.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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