This Is How YouTube (GOOGL) Will Use AI to Boost Ad Revenue

Video platform YouTube, which is owned by parent company Alphabet (GOOGL), is launching a new feature called “Peak Points” that will place ads right after the most exciting parts of a video. This feature uses Google’s Gemini AI to find the moments when viewers are most engaged, like right after a surprise or emotional scene, and then insert an ad. For example, if a video shows a marriage proposal on a snowy mountain, the ad might appear right after the person says “yes.”

YouTube announced this feature during its 20th anniversary event. The goal is to help brands place their ads at just the right time to grab attention and improve performance. As a result, this strategy is expected to increase YouTube’s ad revenue, which grew by 10% from the previous year. It is worth noting that the new feature is part of a larger plan by Alphabet to grow its business by using AI. Indeed, Alphabet recently announced that it will invest $75 billion in AI infrastructure in 2025. It is also expanding the Gemini AI model into Android phones, smartwatches, cars, and TVs.

With “Peak Points,” Alphabet is basically showing how it can use AI to boost ad earnings by placing ads more effectively. This is important because investors may be worried that other AI firms might disrupt its dominance. Recently, Apple’s (AAPL) Eddy Cue pointed out that fewer people are using Safari to search, in part due to the rise of AI tools like ChatGPT. Since Alphabet relies heavily on commercial searches for its ad revenue, losing traffic in this area could be damaging. That’s why the company is working quickly to roll out new AI features that show it can continue to compete and monetize users.

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Overall, 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 $197.69 per share implies 20% upside potential from current levels.

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