Yahoo Finance’s Hamza Shaban reports:
If Google has already moved past its most perilous legal challenge and wiggled out of the perception of playing catch-up to its rivals, the remaining question is one of search economics: How can Google make money from AI without dismantling the foundation of its search business?
In every quarter this year, and most resoundingly this week, Google’s answer to that existential question is that AI will expand its users’ appetites for information.
Google’s AI assistant, AI overviews, and AI Mode may eventually supplant the legacy search bar that has built the company. But the search giant’s first $100 billion quarter suggests cannibalization isn’t the right frame for Google’s AI transition. Augmentation is more like it. …
“Alphabet’s execution on artificial intelligence, evidenced by strong traction for its Gemini app, which has more than 650 million monthly users, along with its ability to deliver solid advertising revenue, continues to drive results while refuting the AI-led disruption narrative,” Morningstar senior equity analyst Malik Ahmed Khan wrote in a note on Thursday. …
Investors’ reaction to Big Tech’s nonstop capex spree can seem fickle. But a reliable way to win approval is to present dazzling earnings, softening the blow of a bigger AI bill, or in Google’s case, showing that even gargantuan investments are already paying off.
Read more here in the takeaway from today’s Morning Brief.