Tech giant Alphabet (GOOGL) is accelerating its AI investments by adding another $10 billion to its spending this year, which will bring the total to $85 billion. This decision comes after a strong quarter where the company’s advertising and cloud businesses performed well. A key part of this shift includes improving Google Search with features like AI Overviews, which summarize information directly in the results. Interestingly, this has led to a significant increase in the number of monthly users, from 1.5 billion to over 2 billion.
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As a result, Google sees these AI tools as the next step for search. The goal will be to keep younger users engaged while exploring new ways to make money from generative AI. Unsurprisingly, analysts at Morningstar (MORN) and Bank of America (BAC) say that this strategy should help Google maintain its dominance and ease investor concerns. In addition, Google’s cloud business, which now brings in over $50 billion annually, provides the company with more financial stability, which should give it more time to figure out how to fully profit from AI.
However, the shift toward AI summaries could change how people interact with the web. Indeed, a Pew Research study found that users who are shown AI summaries are less likely to click on links to websites, which has caused publishers who rely on search traffic to worry. This trend could also impact Google’s own advertising model, which depends on people clicking through to other sites. Nevertheless, the firm believes it can adapt without losing its advantage.
Is Google Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 28 Buys and nine Holds assigned in the past three months. Furthermore, the average GOOGL price target of $215.11 per share implies 11.6% upside potential.
