Google’s stock has seen a 10% increase this year, matching the Nasdaq’s performance but lagging behind other tech giants such as Nvidia and Meta Platforms. The company has struggled to monetize generative AI, with employees behind the technology leaving to start their own ventures. Google’s efforts to commercialize the technology have fallen short, despite the company having $98 billion in cash. Speculation is growing over whether Google will charge consumers for AI-powered search or acquire Cambridge-based marketing software company, HubSpot, to boost advertising market share.
Google’s parent company, Alphabet, reported a disappointing fourth-quarter performance in 2023. Lower than expected advertising sales and increased spending on AI technology resulted in a lackluster report. Despite revenue of $86.3 billion and advertising revenue of $65.5 billion, Google Cloud revenue grew at a slower pace. Capital expenditures also increased significantly, with CFO Ruth Porat noting that spending would continue to rise. Ad revenue numbers could improve if the Fed cuts interest rates, indicating global uncertainty.
Google is making investments in AI to enhance revenue growth, adding Gemini models to its Bard generative AI chatbot. The company has also contracted to invest up to $2 billion in an AI startup. Additionally, there are reports of Google considering charging customers for its AI-powered search engine and possibly acquiring HubSpot. The search giant aims to boost revenues through these initiatives and capitalize on the growing demand for AI-powered services.
The tech giant may introduce premium features for its AI-powered search engine, charging customers for access to advanced capabilities. Google could offer these features as part of its premium subscription services, alongside the free search engine supported by ads. With millions of subscribers already using Google One cloud storage services, the company has the potential to convert more users to paid features. However, the success of charging for AI-powered search remains uncertain, given the lukewarm response to similar services offered by competitors.
Rumors have emerged about Google’s potential bid to acquire HubSpot. The reported deal could be worth over $40 billion, with discussions ongoing about antitrust implications and deal terms. While the acquisition could offer strategic advantages to Google in the marketing software space, analysts are skeptical about the potential upside for the company’s stock. With a price target set at $166 by analysts, Google’s stock is expected to have limited room for growth in the near term. The outcome of these speculated moves and the company’s ability to boost revenue growth will determine its future performance in the market.
