Google’s Gemini AI Model: A Game Changer or More of the Same?

In a surprising turn of events, shares of Google skyrocketed by over 5% following the announcement of its latest artificial intelligence (AI) model, Gemini. This new development puts Google in direct competition with tech giants like OpenAI, Microsoft, and Meta. While the market seems to have embraced this news, it raises several crucial questions about Google’s monetization plans for Gemini and its potential impact on the industry as a whole.

Wells Fargo’s trading desk applauded Google’s move, stating that it would put an end to the constant speculation surrounding the company’s position on AI. Describing Gemini as a potent force, the trading desk acknowledged its positive impact on Google’s stock price. However, a lingering concern remains: what does Google’s monetization strategy for Gemini look like? This unanswered question casts a shadow of uncertainty over the long-term potential of this AI model.

Recognizing the persistent doubts about Google’s AI capabilities, analysts at Bank of America expressed optimism about the introduction of a competitive model like Gemini. According to them, this well-branded AI solution could enhance Google’s consumer search activity and boost its Cloud enterprise sales. While the exact extent of Gemini’s monetization remains undisclosed, Bank of America believes that Google’s commitment to proprietary AI capabilities should positively impact the company’s shares in the first half of 2024.

Despite the lack of clarity regarding future monetization plans, Google will initially license Gemini to customers through its Google Cloud service later this month. This tactical move positions Google as a frontrunner in the race to monetize AI. By making its AI model accessible to customers, Google aims to leverage Gemini’s superiority over OpenAI’s GPT-3.5 chatbot. Unfortunately, no direct comparison was made between Gemini and OpenAI’s latest model, GPT-4 Turbo.

Google isn’t the only tech giant pursuing AI monetization. Microsoft recently launched Copilot, powered by OpenAI’s ChatGPT, embedded in popular Office programs such as Word and Excel. With a subscription cost of $30 per person per month, Copilot has the potential to generate over $10 billion in annualized revenue for Microsoft by 2026, according to Piper Sandler analysts. This success highlights that monetizing AI is a lucrative endeavor that Google cannot afford to ignore.

While the Wall Street reaction to Google’s Gemini announcement was lackluster, JPMorgan analysts view it as a significant step forward in this transformative technological shift. Encouraged by Google’s progress, they note that uncertainty surrounding the monetization path in Search may lead to pushback. Nevertheless, JPMorgan acknowledges that Gemini represents a substantial innovation for Google in the world of Generative AI, which has been commercially available for two years now.

KeyBanc analysts perceive Gemini as the culmination of Google’s numerous AI-related developments throughout the year. However, they caution that it will take time for AI to meaningfully impact growth and profitability. KeyBanc advises patience before drawing any conclusions about the potential impact of Gemini on financial estimates. This cautious outlook suggests that despite the excitement surrounding Gemini, its true value may not materialize immediately.

Google’s unveiling of the Gemini AI model has undoubtedly sparked interest and excitement in the market. While the positive response is largely based on the belief in Google’s strong AI capabilities, much remains uncertain. The question of how Gemini will be monetized, especially in the long run, continues to cast a shadow of doubt. Nonetheless, industry analysts agree that Google’s foray into AI innovation with Gemini is a significant step forward in this technological revolution. Time will tell whether Gemini lives up to its promise or becomes just another AI offering in an already competitive market.

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