Alphabet Shares Rise Over 4% on Expanded US AI Search Features

Alphabet Inc.'s shares have surged following key artificial intelligence announcements at its I/O developer conference, including the rollout of an "AI Mode" for Google Search available to all U.S. users and a $249.99 monthly subscription aimed at AI power users. The company emphasized that generative AI will enhance rather than replace traditional search, with AI Mode enabling users to ask complex questions and potentially allowing more relevant ad placements, which form the bulk of Alphabet's revenue. Alphabet's AI advancements, such as the Gemini 2.5 Flash model and AI agent capabilities for Chrome, demonstrate its commitment to maintaining dominance in the search market despite rising competition from AI chatbots like ChatGPT. Analysts from Citi, JPMorgan, Bank of America, and others have expressed confidence in Google's ability to sustain search growth while improving monetization, maintaining positive price targets ranging from $185 to $200. The stock has reached levels not seen in three months, reflecting optimism about Alphabet's robust financial health and strategic AI initiatives. Overall, Alphabet's AI strategy is viewed as a key driver of future growth amid a rapidly expanding global AI market projected to grow 38% annually over the next five years.