UPDATE: Bank of America has just announced a groundbreaking perspective on Alphabet Inc.’s future growth potential, shifting the focus from traditional metrics to an innovative approach centered around its AI technology, Gemini. This new analysis comes as Google-parent Alphabet continues to advance its AI capabilities across various platforms, creating a wave of excitement and speculation among investors.
In a note released today, analyst Justin Post emphasized that the key to Alphabet’s future profits lies not in the intelligence of Gemini but in its evolving user interface, which is shifting towards a visual, feed-based format reminiscent of popular social media platforms like TikTok and Instagram Reels. This significant change could drastically increase user engagement and, in turn, drive revenue growth.
Post has maintained a Buy rating on Alphabet stocks, setting a price target of $252, which is approximately 3% above Thursday’s closing price. He argues that this new approach could lead to users spending more time within the app, thereby creating additional monetization opportunities without waiting for a significant leap in AI performance.
As Google integrates this feed format into essential applications such as Android, Chrome, and Gmail, it could leverage its vast user base to boost engagement and sales rapidly. Post remarked, “A more visual and feed-based layout may drive higher engagement, especially for mobile users used to scrolling formats.”
This transformation is critical as Google faces increasing competition from other AI-driven platforms. The analyst recognizes the challenge of retraining user habits but believes that Google’s unparalleled reach and its YouTube DNA position it favorably to implement this monetization strategy effectively.
Additionally, the report indicates that visual AI is fast becoming the primary driver of social media feeds, as evidenced by the rapid success of OpenAI’s Sora video app, which recently skyrocketed to the top of Apple’s U.S. App Store. This trend underscores the mainstream acceptance of AI-native video content.
As Google continues to refine its Gemini platform, it appears well-positioned to capture a larger share of the growing generative AI market, projected to reach a staggering $71 billion by 2025 and potentially soar to $890 billion by 2032.
Investors are keenly watching how these developments will unfold. Other analysts have also weighed in, with HSBC giving a bullish Buy rating and a price target of $285, while TD Cowen adjusted its target from $270 to $280, citing strong Search and Cloud performance.
As the landscape of AI technology continues to evolve, all eyes are on Alphabet to see how its new growth strategy will impact the company’s revenues and user engagement. With this critical shift in focus, Google’s journey in the AI domain is just beginning, and its success could redefine digital engagement for billions of users worldwide.
Stay tuned for further updates on this developing story that could reshape the future of technology and social media.