Alphabet Stock Initially Jumps As Google Considers Charging For AI Search: The Details
Portfolio Pulse from Adam Eckert
Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) shares fluctuated after a report that Google is considering charging for AI-powered search features. This would be the first time Google has put part of its core Search product behind a paywall, with its traditional search engine remaining free. The move comes after Microsoft Corp (NASDAQ:MSFT) launched its AI-powered search tool, Copilot, over a year ago. Google's Search business generated about $175 billion in 2023, over half of Alphabet's total sales.
April 03, 2024 | 8:37 pm
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Microsoft Corp's earlier launch of its AI-powered search tool, Copilot, positions it as a direct competitor to Google's potential new AI search features.
Microsoft's entry into AI-powered search with Copilot over a year ago may have influenced Google's consideration to charge for similar features. The impact on MSFT's stock is neutral short-term, as the market has already absorbed its AI search capabilities, but it highlights the competitive landscape.
CONFIDENCE 75
IMPORTANCE 75
RELEVANCE 70
NEGATIVE IMPACT
Alphabet Inc's shares experienced volatility following news of potentially charging for AI-powered search, initially spiking then dropping in after-hours trading.
The initial positive reaction to the news of potentially charging for AI-powered search features indicates investor optimism about new revenue streams. However, the subsequent drop suggests concerns about the impact on user engagement and competition, particularly in light of Microsoft's earlier move into AI-powered search.
CONFIDENCE 80
IMPORTANCE 90
RELEVANCE 100
NEGATIVE IMPACT
Alphabet Inc's Class A shares mirrored the movement of its Class C shares, with initial spikes followed by a downturn in after-hours trading on news of Google considering AI search charges.
Similar to GOOG, GOOGL shares' initial positive reaction likely reflects optimism for new revenue opportunities from AI-powered search charges. The downturn mirrors concerns over user retention and competitive pressures, especially considering Microsoft's AI advancements.
CONFIDENCE 80
IMPORTANCE 90
RELEVANCE 100