Not too long ago, Alphabet’s (NASDAQ:GOOGL) core search business was considered at risk from the rise of GenAI. That narrative has certainly flipped over the past few months.
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Alphabet’s AI positioning is considered increasingly sound, and got another boost on Tuesday when the search giant announced the release of Gemini 3. The company’s newest Gemini model is being rolled out across the Gemini app, AI Mode in Search, and its developer platforms. Benchmark results indicate that Gemini 3 Pro has achieved significant improvements compared with Gemini 2.5 Pro. Additionally, Gemini 3 Pro now leads the LMArena Leaderboard with a score of 1501 Elo (this is a platform that evaluates AI models on various tasks and compares their performance).
Alphabet also revealed Gemini 3 Deep Think, an advanced reasoning model, which will first be provided to safety testers before becoming available to AI Ultra Subscribers. Gemini 3 Deep Think surpasses the standard Gemini 3 model in reasoning, scientific knowledge, and visual reasoning challenges.
In addition, Alphabet launched a new IDE (integrated development environment) called Google Antigravity, now accessible in a free public preview with support for Gemini 3 and other cutting-edge models. The platform is designed to leverage the agentic intelligence capabilities of AI models more effectively, as seen in its Agent Manager, Editor, and task management features.
Noting that investor expectations were high for Gemini 3, KeyBanc’s Justin Patterson thinks the announcements delivered the goods.
“Third-party reviews were highly favorable, and the jump in performance from Gemini 2.5 to 3 suggests scaling in pre-training remains solid,” says the analyst.
Alphabet has consistently highlighted its full-stack approach to AI as a key differentiator, and Patterson believes the launch of Gemini 3 reinforces this advantage, with the model achieving top benchmark scores, being integrated into AI Mode in Search, and introducing the Antigravity IDE to enhance the coding experience.
Looking ahead, Patterson highlights adoption as the key factor to watch. The analyst believes the company’s full-stack strategy should allow the company to rapidly deliver products to both consumers and developers, while also offering cloud infrastructure tailored for AI workloads. With AI Overviews reaching over 2 billion MAUs and the Gemini app exceeding 650 million MAUs (monthly active users), Patterson believes Alphabet is showing it can compete effectively in AI while also delivering strong financial gains.
“With shares trading at 21.2x 2027E P/E, we continue to view risk/reward as attractive,” sums up the analyst.
Bottom line, Patterson maintains an Overweight (i.e., Buy) rating on the shares, backed by a $330 price target, implying returns of ~13%. (To watch Patterson’s track record, click here)
Over the past three months, 38 analysts have weighed in on GOOGL – and the verdict is upbeat. 31 call the stock a Buy, with the remaining seven opting to Hold, culminating in a Strong Buy consensus. Yet, the Street’s $312.00 average price target suggests only modest upside from here. (See GOOGL stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.