Alphabet is the 'ultimate consumer company': Analyst

Alphabet's Google (GOOG, GOOGL) held its highly anticipated I/O conference today, announcing new artificial intelligence initiatives. CFRA Research Senior Equity Analyst Angelo Zino joins Market Domination Overtime to discuss Google's AI moves and the future of the tech company.

Google introduced new AI-powered search capabilities and Gemini capabilities. The company also announced it'll start featuring AI overviews for searches in the US by the end of the week, with rollout plans for the rest of the world set for the coming months. "They've clearly been in beta mode here over the last couple of months. They're now going full gear into it, and I think that's a good thing," Zino says.

"What they're doing on the infrastructure side of things, what they announced at Google Next last month, kind of shows really they are best in class on that side of things," Zino says of Google's momentum.

He adds, "Alphabet continues to be that ultimate consumer company out there, and they are essentially the internet in many respects." The company could see some disruptions as the AI competition heats up; however, Zino feels that its upcoming opportunities across all sides of the business make the stock a good pick overall.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Melanie Riehl

Video transcript

Angela, I wanna switch gears because today uh Google holding its IO conference, right, introducing some new A I powered search capabilities as well as Gemini capabilities.

Um And I know you cover alphabet as well.

So I'm just curious, you know what you thought of what they announced and whether alphabet is successfully making a case that it is going to be one of the big leaders in A I, I mean, we think so I, I, when you kind of look at at what they announced here, a lot of it very incremental in nature, I'd say kind of maybe that the biggest, uh you know, news was maybe the fact that um they're going to start featuring A I overviews um by the end of this week um in the US.

And then, you know, in the coming months, you'll, you'll see it um on a global basis, but A I overviews essentially kind of A I powered summaries out there.

Um And you look to do a search out there.

So um they're throwing kind of more A I capabilities across their search business.

It's something, you know, they've clearly been in beta mode here.

Um over the last couple of months, they're now kind of, you know, go going full gear into it.

And, um, I think that's a, that's a good thing.

I think that kind of, you know, showcases them kind of again, you know, looking to kind of get more A I enabled out there in a very sensitive area um in an area of their business that could potentially be disrupted over the next couple of years.

Um And then, you know, they also kind of announced a number of kind of, you know, model upgrades with um uh with Gemini and, and one, you know, 1.5 as well as flash.

So, um and then, you know, we, we also saw a number of improvements on the android side of things um that they could potentially launch here um as the year.

So um incremental improvements is how I would kind of look at what alphabet is doing here as far as A I is concerned.

But our view also is kind of what they're doing on the infrastructure side of things, what they announced that Google next last last month, um kind of shows really, they are best in class on that side of things.

So we do like the incremental um improvements as well as their kind of best in class uh infrastructure out there.

I'm just curious, Angelo, you know, we, we also just heard from uh you know, Sam Altman and his team at open A I uh um, if and when open A I launches their own search product Angelo and that's been reported on, um, what kind of competitive risk do you think that poses to Google's bread and butter search business?

You know, it's, it's definitely a risk out there.

I mean, we, we did write a note about it yesterday and, you know, it, it's kind of wait and see and we kinda have to see exactly what they roll out with and, and how they roll it out.

Um I think it'll also be interesting to kind of see what Apple has to announce next month.

Um And whether or not, you know, they, they strike a partnership with open A I and how that kind of looks across their ecosystem.

But um you know, the way we look at it is alphabet continues to be that old to make consumer um company out there.

And um they are essentially the internet in many respects.

So, could they potentially see some disruption across their business model?

Could they potentially see some share loss?

Of course, they can.

Um And in fact, we know we anticipate it to some extent, but in the same respect, they've also got a number of opportunities across other parts of their business specifically, you know, areas like the cloud.

So, um we do continue to like the story.

We do think they will continue to, you know, be fine on the, the search side.

Of things with some share loss.

But that said um you know, open A I is a formidable competitor out there.

And um it will be definitely interesting to kind of see what Apple has in store here um with partnerships that they announced, whether it be with, you know, Gemini on, on alphabet side of things or open A I. Um So wait and see, wait and see.

We got a lot of a lot of big tech news coming Angelo.

Thank you so much for joining the show.

Appreciate it.

Alright.

Thanks for having me guys.