In a surprising move, Google-parent Alphabet is reportedly exploring the option of charging users for its new AI-powered internet search features. This news comes after a recommendation from a Bank of America analyst who suggests investors should consider both the potential upside and risks of this move.
Following a report by the Financial Times on the potential charge for AI-search features, Google’s stock fell, closing out of a buy zone with a drop of 2.8%. However, the company’s premium subscription tier already offers access to AI assistant Gemini in Gmail and Docs, indicating a potential avenue for recovering costs without compromising margins.
While the traditional search engine will remain free, with ads continuing to appear alongside search results for subscribers, analysts are questioning how the integration of chatbot AI technology in search queries will impact advertising revenue for Google. The possibility of introducing a paid tier for premium capabilities could drive new paid subscribers for the tech giant but may also disrupt the existing free search business model.
Alphabet is expected to update its strategy at the Google I/O 2024 developers event in May, giving investors and industry experts a chance to learn more about the company’s plans. Google’s annual cloud computing conference, scheduled from April 9 to April 11, will also provide insight into the tech giant’s future endeavors.
With a strong IBD Relative Strength Rating of 82 out of 99, outperforming 82% of stocks in the past 12 months, Google is considered one of the top AI stocks to watch. Investors can stay informed on AI, cybersecurity, and cloud computing updates by following Reinhardt Krause on Twitter and utilizing resources such as IBD’s ETF market strategy and stock lists for trading options and timing the market. Additionally, IBD Live offers daily stock market analysis for investors seeking expert guidance in navigating the ever-evolving tech landscape.
