3 Reasons to Buy Alphabet Stock Like There's No Tomorrow

The search giant just announced a metric ton of upgrades for Google search — all powered by artificial intelligence (AI).

One of the biggest developments to hit tech over the past year or so has been the advent of artificial intelligence (AI) and the flood of ways it can be used to create original content, save time, and increase productivity.

For Alphabet (GOOGL 0.97%) (GOOG 0.89%) investors, the big question that emerged from these developments is whether the advent of generative AI would spell trouble for Google’s flagship search. After all, search represents the lion’s share of Alphabet’s revenue, and if its supremacy were challenged, that would call much of the investing thesis into question.

At the company’s Google I/O 2024 Developers Conference, Google revealed that Search is getting a significant upgrade, which will include a host of new features powered by its Gemini AI. If the upgrades shown at the presentation are any indication, Google’s search dominance is safe for now.

Here are three of the biggest upgrades coming to Google Search and why investors should be buying the stock like there’s no tomorrow.

A person's hand cupped open with a hologram of an AI chatbot above saying Hi, can I help you?

Image source: Getty Images.

1. AI Overviews

Beginning this week, Google Search will unveil a new experience, AI Overviews, which will mark the biggest overhaul of its search engine in years. Google will use generative AI tools to organize how search results are displayed. In addition to providing a brief summary in response to certain queries, AI Overview will also provide detailed information to answer more complex questions.

To be clear, Overviews won’t appear for all searches, as the simplest searches don’t need to change. However, Google believes this generative AI upgrade will make search more useful for more people.

2. Video search powered by AI

Sometimes it’s difficult to put what you see into words, which likely gave birth to the phrase “A picture paints a thousand words.” One of the search giant’s newest features, powered by its Gemini AI, helps bring that lesson home.

Google will soon debut new video search tools that allow users to take a video and use it to search for answers. In its demo, Google showed a video of a vintage record player with a malfunctioning arm that wouldn’t stay on the record, along with the query, “Why will this not stay in place?” The search feature then uses Gemini AI to analyze the video and provide a list of suggestions about how to fix the problem.

While Google Lens already combines photo with search, this takes that capability to the next level.

3. Meal and travel planning

Another by-product of integrating advanced generative AI skills into Search is the ability to create plans of various kinds. While earlier versions of AI could only handle simple, one-step tasks, Gemini imbues Google Search with the ability to handle more complex planning.

Liz Reid, head of Google Search, suggested searching for something like “create a three-day meal plan for a group that’s easy to prepare.” Google then supplies menu suggestions and recipes for each of the three days, with the ability to replace any of the original suggested meals from a list of substitutes. It also alloww you to customize the meals, like “swapping dinner to a vegetarian dish.”

The ability to plan meals and travel is already available in Search Labs and will be coming to users later this summer. Other options coming later this year will include such topics as date night, parties, and workouts.

Is Alphabet stock a buy?

One of the things that has weighed on Alphabet stock over the past year is lingering questions about Google’s ability to mount an effective AI strategy. The features announced above, as well as many more not covered here, should put any remaining questions to rest.

Furthermore, the company’s valuation is compelling, with Alphabet stock currently selling for 26 times trailing earnings, a discount to the multiple of 27 for the S&P 500.

Taken together, its giant leap forward in AI functionality and its attractive valuation shows why investors should be buying Alphabet stock like there’s no tomorrow.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

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