Morgan Stanley notes Google announced in its I/O keynote that AI Mode, its advanced reasoning offering, is now available to all of Google’s U.S. users and that it is also expanding the capabilities of AI Mode with more agentic commercial experiences for users over the course of 2025. The firm believes the value of scaled first party data and distribution is “higher than ever” and argues I/O showcased how the company intends to leverage its leading user bases and distribution to drive next generation more personalized “search” and agentic experiences. Next gen tools are improving too, but for now the firm is “most optimistic on the free pipeline of products to come” and it maintains an Overweight rating and $185 price target on shares of Google parent Alphabet (GOOG) (GOOGL).
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