“Buy After Google I/O,” Says Morgan Stanley About Alphabet Stock

In recent times, Alphabet (NASDAQ:GOOGL) stock has been under pressure, weighed down by mounting antitrust challenges and growing concerns that AI could erode its search dominance. However, this week’s Google I/O conference has flipped the script, showcasing the company’s commitment to leveraging its leading user bases and distribution to drive next-generation, personalized search experiences.

AI-Driven Innovations

At the conference, CEO Sundar Pichai announced the availability of AI Mode, a conversational chatbot interface for Google’s search engine, to all US users. The company will also be enhancing AI Mode throughout 2025 with more agentic, commerce-focused experiences for users. These features will enable users to connect other Google apps, like Gmail, to provide more context-aware responses, such as suggesting events based on travel plans found in emails.

Additionally, Google unveiled Deep Search, which will use its query expansion technology to deliver expert-level, fully cited reports with unique visualizations, starting with sports and financial data. New agentic features will help users complete tasks like booking tickets or making reservations by navigating websites and filling out forms. Search Live will allow users to use their phone cameras in real-time, enabling Google to assist based on what they’re seeing.

Next-Gen Shopping Tools

Google also showcased next-gen shopping tools, offering a dynamic, personalized product browsing experience using its massive catalog. The new AI-powered “Try-On” feature will show how clothes might look on the user. These innovations demonstrate Google’s commitment to staying ahead of the curve in the AI era.

Morgan Stanley’s Take

Morgan Stanley analyst Brian Nowak believes that Google’s AI-driven innovations will drive the next wave of widespread adoption. He notes that for GenAI platforms to succeed, they’ll need to introduce compelling new features across their free tiers, while reserving the most advanced capabilities for paid subscriptions. Google has delivered on this front, launching Agent Mode in the Gemini app, which allows users to assign and automate multiple tasks.

Analyst Rating and Price Target

Nowak is staying bullish on GOOGL shares, assigning an Overweight (Buy) rating and a $185 price target, implying a ~10% upside from where the stock trades now. The average price target stands at $197.69, pointing toward one-year returns of 17%.

Conclusion

In conclusion, Google I/O has showcased the company’s commitment to leveraging its leading user bases and distribution to drive next-generation, personalized search experiences. With AI-driven innovations like AI Mode, Deep Search, and next-gen shopping tools, Google is poised to stay ahead of the curve in the AI era. As Morgan Stanley’s Brian Nowak notes, these innovations will drive the next wave of widespread adoption, making Alphabet stock a compelling buy.

Actionable Insights

• Monitor the rollout of Google’s AI-driven innovations to gauge their potential benefits.
• Consider investing in Alphabet stock, given its potential for long-term growth and increasing engagement and monetization for creators and advertisers.
• Keep an eye on the company’s progress in enhancing AI Mode and Deep Search, as well as its next-gen shopping tools.

Summary

In this article, we’ve explored Alphabet’s commitment to leveraging its leading user bases and distribution to drive next-generation, personalized search experiences. With AI-driven innovations like AI Mode, Deep Search, and next-gen shopping tools, Google is poised to stay ahead of the curve in the AI era. As Morgan Stanley’s Brian Nowak notes, these innovations will drive the next wave of widespread adoption, making Alphabet stock a compelling buy.