Amid a report that Google-parent Alphabet is exploring options to charge users for its new artificial intelligence-powered internet search features, a Bank of America analyst says investors should weigh possible upside and risks from the move. Google stock fell on Thursday amid a Financial Times report.
"(According to the FT), Google would add certain AI-powered search features to its premium subscription tier, which already offers access to Gemini AI assistant in Gmail and Docs," said BofA analyst Justin Post in a report." Google's traditional search engine would remain free, and ads would continue to appear alongside search results, even for subscribers."
Google Stock: AI Upside And AI Risks
One big question for GOOGL stock has been how will integrating chatbot AI technology into search queries impact advertising revenue? Analysts expect Alphabet to update its strategy at the Google I/O 2024 developers event in May.
On the stock market today, Google stock fell 2.8% to close at 150.53, dropping out of a buy zone. Google stock has advanced 8% in 2024.
The FT report noted that Google hasn't made a decision on charging for AI-search features.
"We believe consideration for charging users for AI-powered search features would either stem from added AI computing/licensing expenses, or lower early ad click-through rates, for AI driven search results," BofA's Post said. "While the monetization of AI search and Gen-AI capabilities is in nascent phase, introducing a paid tier for premium capabilities would allow Google to recover a portion of the costs without compromising margins."
Google Cloud Computing Conference
Post added: "On a positive note, having a paid business model around AI has been a perceived positive for competitors, and could be good for Google if new AI services have the potential to drive new paid subscribers. On the negative side, Google's consideration of a paid service would suggest AI driven results could be somewhat disruptive to the free search business mode."
Google hosts its annual cloud computing conference from April 9 to April 11.
GOOGL stock owns an IBD Relative Strength Rating of 82 out of a best-possible 99, according to IBD Stock Checkup. That means it has outperformed 82% of stocks in the past 12 months.
Google is among AI stocks to watch.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
