While introducing new artificial intelligence initiatives at the Google I/O 2023 developers event Wednesday, Alphabet made one thing clear to investors: Advertising is here to stay no matter how much internet search changes. GOOGL stock jumped on the AI announcements made at the show.
Alphabet unit Google plans to unveil more of its ad strategy amid the emergence of generative AI at Google Marketing Live on May 23.
GOOGL stock popped 4.1% to close at 111.75 on the stock market today. As of Wednesday's gain, Google stock has gained 26% in 2023.
How Google's core digital ad business will be impacted by the AI alliance between Microsoft and startup OpenAI has been an overhang on Alphabet stock. That's because OpenAI's ChaptGPT provides answers to prompts while Google's search engine sends users to websites, sponsored or not.
"Importantly, today's I/O conference showed generative AI search results with ads, and it noted that search ads will continue to play a critical role in generative AI search," said William Blair analyst Ralph Schackart in a report.
"He added: "In general, Alphabet is attempting to change the way users search and seek out information. Rather than simply being provided with an array of links, users will be provided with a more integrated search results page. At the top of the page, an AI-powered snapshot will give users a lay of the land on the topic they were searching, with links."
GOOGL Stock: How AI Will Change Ad Strategy
At the software developer's conference, Google unveiled Search Labs, described as "a new way to access early experiments in Search using generative AI capabilities."
"With (Search Generative Experience), Search ads will continue to appear in dedicated ad slots throughout the page," said Vidhya Srinivasan, vice president and general manager for Google Ads, in a blog. "In this new experience, advertisers will still have the opportunity to reach potential customers along their search journeys. We'll test and evolve the ads experience as we learn more."
She added: "As always, we're committed to transparency and making ads distinguishable from organic search results. When Search ads do appear, they will continue to feature our industry-leading clear and transparent ad labels with the 'sponsored' label in bold black text."
Before Google I/O 2023, the company already made clear it would incorporate AI in search amid pressure from Microsoft.
GOOGL stock is just in range from a 106.69 cup-with-handle buy point initially cleared on April 6. Investors also could use the April 6 high of 109.17 as another entry.
Google's Bard Takes On ChatGPT
Most of the upgrades announced at Google I/O involve Bard, Google's answer to OpenAI's Chat GPT. OpenAI in March launched its next-generation chatbot technology. It's called GPT-4. The new language model is multimodal. That means it accepts text, speech, images and video as input.
Meanwhile, the "godfather of AI," Geoffrey Hinton, in early May said he was leaving Google. He warned of AI's negative impact on humanity.
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