Alphabet Stock Surges on Monday Morning

Alphabet Stock Surges on Monday Morning

Actions of Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) billed higher on Monday, gaining up to 7.8%. As of 10:49 a.m. ET, the stock was still up 7.1%.

The catalyst that propelled the tech giant to the top was the news that the company may have found its first major licensee for its artificial intelligence (AI) services.


Alphabet is said to be “in active negotiations” with Apple to allow Google’s Gemini to support some AI-based features in the iPhone, according to a story first reported by Bloomberg. The company could go so far as to integrate Alphabet’s suite of AI tools into the device itself, according to the report, which cited “people familiar with the situation.”

If the deal goes through, it would be the first clear indication that Alphabet has a market for its AI services beyond its cloud infrastructure offering, Google Cloud. Such a deal would expand an existing partnership between the two, as Apple offers Google as the default search engine in its Safari web browser.

A huge vote of confidence

It’s still early to Generative AI, and the navigation has not always been smooth. Last month, Alphabet temporarily suspended Gemini’s image generation capabilities when it produced inaccurate depictions of historical figures. Google took the features offline and apologized, saying: “Gemini image generation got it wrong. We will do better.” This helps illustrate that even the most advanced generative AI models are still a work in progress.

Investors have questioned Alphabet’s ability to capitalize on the AI ​​opportunity and this is the first sure sign that the company is heading in the right direction. And the opportunities ahead are vast, although estimates vary widely. Generative AI could be worth between $2.6 trillion and $4.4 trillion per year, according to global management consulting firm McKinsey & Company.

That said, Alphabet remains a relative bargain, selling at 26 times earnings, a discount to the company’s price-to-earnings (P/E) ratio of 28. S&P500. The digital advertising market, Alphabet’s bread and butter, is currently experiencing a rebound, and the profit potential from AI is significant.

It is now the it’s time to buy Stock Alphabet before the end of this fire sale.

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Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Danny Vena holds positions at Alphabet and Apple. The Motley Fool holds positions and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.

Why Alphabet Stock Bounced Monday Morning was originally published by The Motley Fool

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