Alphabet stock jumps, fueled by rapid AI mode user adoption

Shares of Google parent company Alphabet (GOOG, GOOGL) climb higher on Thursday after the tech giant released third quarter earnings results yesterday..

RBC Capital Markets equity analyst, Brad Erickson, says Google AI Mode's rapid growth is a "really good signal" for Alphabet's AI opportunities.

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Video Transcript

00:00 Speaker A

The Gemini app, um with what, 650 million monthly users, was that also a surprise and and how important is that for Google to keep on growing that?

00:12 Speaker B

Yeah, the the Gemini app certainly matters a lot and that's kind of the direct comp to ChatGPT. So all good on that front.

00:23 Speaker B

I think the the incremental data point last night was the 75 million daily active users on AI mode, which they really only rolled out maybe like five or six months ago broadly to the US and Europe.

00:41 Speaker B

Uh, that is super important because I think, you know, for for some of the early adopters and the the hyper users of these, they will use, you know, the chat GPT app or the Gemini app, for example. But for for kind of the broader masses, I would say AI mode is probably going to be one of the first introductions people have to generative AI and and the fact that that's starting to grow very, very quickly is a really good signal, I think for Google.

01:08 Speaker A

What does that tell you about these concerns that people are going to just be going to chat GPT for example and not Googling anymore? Is it just is it still going to happen maybe? It just pushes it further off?

01:20 Speaker B

Um, I mean, I would say right now there's the the fact pattern and the data points that have come out lately just do not support that view. That's not a knock on chat GPT. Their growth continues. The adoption of that uh has is is still going uh really well.

01:44 Speaker B

I think from a Google perspective though, there's just clear evidence of incremental searches that people never would have done in a sort of traditional search environment. and if you continue to do those, there's going to be a portion of that mix that is very commercial and Google is set up with 15 million plus advertisers to monetize that immediately. And that's what they said last night. It's already contributing to the growth of the search business. So, there it is.

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