Shares in Alphabet fell on Tuesday as investors digested artificial intelligence news from the Google I/O conference for software developers. Wall Street analysts had hoped the event could boost Google stock amid growing AI-driven competition on the core internet search business.
Heading into the conference, Google stock was down about 12% in 2025. On the stock market today, Google stock fell 1.5% to close near 164. The Google I/O event coincided with Microsoft's Build conference in Seattle. Microsoft stock dipped a fraction to close near 458.
At the event, Google announced a premium AI subscription service, priced at $249.99 monthly, targeting business customers. The high-end search service, built around Google's new Gemini 2.5 AI model, costs about $50 more than rival OpenAI's premium service.
The new Gemini 2.5 family of models underpinned most of the Google I/O product updates. The Gemini app now has 400 million monthly active users, Google said.
AI Mode Added To Search
Also, Google announced that "AI Mode," its newest generative AI-based search engine, is available in the U.S. AI Mode is a follow-on to AI Overviews, which provides search summaries rather than web links. AI Mode goes a step further with chatbot-style search answers, prompting a conversation.
"We believe Google's 'total reimagining of search' is taking shape as AI Mode integrates what have been somewhat disparate AI products," said JPMorgan analyst Doug Anmuth in a report.
In addition, AI Mode will utilize Google's newest models to provide a deeper exploration of topics. And, AI Mode taps into Google's datasets for real-time information. AI Mode connects to other Google apps and provides personalized responses.
Further, AI Mode allows Google users to choose traditional search results if they want them. One reason Google provides an opt-in option is that generating AI Overviews using advanced models like Gemini 2.5 is computationally more intensive and more expensive than providing traditional web links.
Still, Wall Street analysts continue to question the impact of AI Overviews and AI Mode on the traditional search advertising business.
"Net-net, we'd expect bears to walk away undeterred on the linear view that (ad) impression opportunities will decrease significantly," said RBC Capital analyst Brad Erickson in a report.
Alphabet hosts Google Marketing Live on Wednesday for the advertising industry. The event will focus on monetization of new AI products.
As expected, the Google I/O event featured "AI agents" that perform autonomous, goal-driven tasks. They included Project Mariner, Project Astra, Jules and Deep Research.
Google Stock: Technical Ratings
Project Astra involves a real-time multimodal AI assistant, while Project Mariner is a browser agent used on personal computers. Jules is a coding agent for software bugs. Deep Research is an assistant that can dig into complex topics and create reports.
Alphabet stock holds an IBD Composite Rating of 86 out of a best possible 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Google stock holds an Accumulation/Distribution Rating of B. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
