Klarna (KLAR), the Swedish buy-now, pay later (BNPL) company that went public in early September at a $15 billion valuation, has teamed up with Alphabet’s (GOOGL) cloud computing unit Google Cloud.
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The goal is to deploy Google’s AI models to create creative marketing campaigns and boosts security on its platform, the fintech company said. Reacting to the news, investors erupted in excitement, with KLAR stock climbing more than 5% during the first hour of trading on Thursday.
Klarna Wants Shopping to ‘Feel Smarter’
Under the partnership, Klarna will tap Google’s latest generative artificial intelligence models, including Veo 2, an advanced video generator, and Nano Banana, an image generator and editor powered by AI.
Through these tools, Klarna will create digital “lookbooks” and refine its visuals to make shopping on it app “feel smarter and more personal” for its more than 114 million users worldwide. A lookbook is a visually rich marketing collection—typically a book, magazine, or digital presentation.
According to Klarna, its early pilot studies of such AI integrations improved the time users sent on its platform by 15%, with orders soaring by 50%. “For us, this is proof that when creativity meets AI, the results can transform the way people shop,” Klarna said.
On security, the fintech company noted that it will adopt Google Cloud’s advanced machine learning models to fight fraud and money laundering on its platform. “This ensures that as Klarna raises the bar for creativity, it also continues to safeguard consumers with next-generation protections,” Klarna added.
Klarna Weaves AI Deeper into DNA
The new partnership with Google Cloud is the latest effort by the BNPL leader to improve its platform with the aid of artificial intelligence. Already, Klarna uses a chatbot powered by AI startup OpenAI’s architecture to engage its customers.
As of February 2024, the AI assistant handled two-third of the business’ customer service chats. Moreover, over the year, Klarna has also added other AI-powered features to its platform, such as personalized shopping feed and image-search.
Is Klarna a Good Stock to Buy?
Klarna is currently trading below its initial public offering high of $57.20 per share. However, Wall Street remains bullish on the company. Across the Street, Klarna’s shares currently have a Strong Buy consensus rating, as seen on TipRanks.
This is based on 11 Buys and three Holds assigned by 14 Wall Street analysts over the past three months. Furthermore, the average KLAR price target of $50.46 suggests a 16% upside potential from the current level.
See more KLAR analyst ratings here.