Google I/O 2025 Reminds Investors Not to Count Google Out of AI Race
The company came out swinging, so let's recap the slew of new AI-related features announced — and the price levels we're watching to pick up more shares.
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Alphabet GOOGL held its annual developer event Tuesday and the company came out swinging, reminding investors it remains an AI player and, more importantly, showed how it is leveraging AI into search.
We recognize the evolving AI landscape and that the growing number of features like those we are seeing in ChatGPT raise questions GOOGL investors haven’t had to face in some time. Our view on Alphabet remains that it would be a mistake to discount its AI position, given the vast quantities of data it can leverage through its search, shopping, advertising, and YouTube businesses. Tuesday’s event reminded us of that, and it should do the same with others.
Reading between the announcements, we also see the company leaning more into subscription business models, something we like quite a bit given the visibility and predictability it brings. The larger part of Alphabet's revenue stream it becomes over time, the more Wall Street will need to revisit how it values the shares.
Our last purchase of GOOGL shares was over a year ago near $134, and we have room to round out the Pto Portfolio’s position size. Given our comments about the current market environment as well as the register ringing and trimming action we took Tuesday, even though we see enough upside to our $200 price target to warrant action, we are likely to see an even more favorable entry point emerge.
As we wait for that to emerge, we will keep a close eye on key support levels, the next of which is the 50-day moving average at $159. We’ll also continue to follow the efforts by the Department of Justice to split the company, and subject to the outcome we expect Alphabet will appeal thereby extending the timetable for any impact several years out.
Google’s I/O Event
Meta META has its Connect developer event, Samsung its Unpacked event, and very soon we will be in the middle of Apple’s AAPL WWDC 2025 developer event. These events are not necessarily aimed at consumers, but rather the developer community that expands the use and functionality of each company’s hardware, software, and services. Google did that Tuesday during its annual Google I/O event and the company leaned heavily into AI.
This included Google sharing AI Mode in Search, end-to-end AI search powered by a custom Gemini 2.5 model. The AI Mode is also getting a new Deep Search mode, a Live Search feature that lets the AI tool access the camera of a device, and new agentic shopping-focused features. For example, users can purchase event tickets and book an appointment directly from the interface. They will also be able to visually search for the product they want, try out a wide selection of apparel virtually just by uploading a picture of themselves, and use AI agents to track prices of products and make purchases automatically.
The company also showcased a demo of its new Gemini-powered Android XR platform that will be the operating system for Samsung's upcoming Project Moohan smart glasses. Google also hinted it will be working with other wearable partners. One of those is Warby Parker WRBY, which announced Google has committed up to $75 million for product development and commercialization costs and will invest another $75 million in the company if it hits certain collaboration milestones. The first of these products are expected “after 2025” and will include prescription as well as non-prescription lenses. Obviously, this will bring the two into competition with Meta and its Meta AI Glasses with Ray Ban, but it also reaffirms the expectations laid out by Qualcomm QCOM for the "internet of things" — or internet-connected device — market.
Google also said it is adding a new AI feature to Google Meet. The video conferencing platform will now support real-time speech translation and can help speakers with different native languages converse with minor lag. Currently, the feature can translate English and Spanish but is expected to expand to other languages.
On the video front, Google also unveiled Google Beam, which it bills as a 3D communications platform. Beam uses an array of six cameras to capture a video stream of the user from different angles. Then, an AI system combines them to turn the 2D feed into a 3D light field display. The company is also using head-tracking sensors to accurately capture the user at 60 frames per second (fps). Google is also working with HP HPQ to introduce the first Google Beam devices later this year but per the company we should expect to hear more about this in June during InfoComm 2025.
Finally, the tech giant also introduced Google AI and Google AI Ultra plans for its suite of Gemini features. The former replaces the Google One AI Premium plan and will be available for $19.99 per month, while the Google AI Ultra plan will cost $249.99 a month and boasts higher usage limits, Gemini, film-making tools, YouTube Premium and a host of other features including 30 terabytes of cloud storage across Google’s suite of services.
At the time of publication, TheStreet Pro Portfolio was long GOOGL, META, QCOM and AAPL.
