Why Alphabet Stock Rebounded Monday Morning
stock alphabet (google 6.37%) (GOOG 6.19%) It rose as much as 7.8% on Monday. As of 10:49 a.m. ET, the stock was still up 7.1%.
The catalyst that catapulted the tech giant to greater heights was reports that the company may have found its first large licensee for its artificial intelligence (AI) services.
gemini
Alphabet is said to be “actively negotiating.” apologize According to a story first reported by Bloomberg, it has licensed Google’s Gemini to underpin certain AI-based features on the iPhone. The company may also integrate Alphabet’s suite of AI tools into the device itself, according to the report, which cites people familiar with the situation.
If the deal goes through, it would be the first clear sign that Alphabet has a market for AI services beyond its cloud infrastructure offering, Google Cloud. The deal will expand the existing partnership between the pair, as Apple offers Google as the default search engine within its Safari web browser.
a huge vote of confidence
Generative AI is still in its infancy, and it hasn’t always been smooth sailing. Last month, Alphabet temporarily suspended Gemini’s image-creation feature over an inaccurate representation of a historical figure. Google took the feature offline and apologized, saying “Gemini image creation was bad. We will do better.” This helps illustrate that even the most advanced generative AI models are still a work in progress.
Investors have been questioning Alphabet’s ability to capitalize on AI opportunities, and this is the first clear sign that the company is heading in the right direction. And while the opportunities ahead are vast, the estimates are wide-ranging. According to global management consulting firm McKinsey & Company, the value of generative AI could range from $2.6 trillion to $4.4 trillion annually.
That said, Alphabet still sells for 26 times earnings, a relative discount. S&P 500. A rebound in the digital advertising market, Alphabet’s bread and butter, is underway, and the revenue potential from AI is significant.
Now is the time to buy Alphabet stock before this special sale ends.
Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. Danny Vena holds positions at Alphabet and Apple. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.
