TLDR:
– Alphabet, the parent company of Google, has rebranded its AI chatbot from Bard to Gemini and has introduced a tiered subscription service for the bot.
– The top-tier Ultra 1.0 package of Gemini, priced at $19.99 per month, utilizes the Gemini Advanced AI model and offers advanced capabilities for tasks such as programming and logical analysis.
– The company claims that Gemini has surpassed competitors on various benchmarks, including college-level reasoning problems and speech recognition.
Top analyst John Blackledge from TD Cowen believes that the new offering of a paid subscription product demonstrates Alphabet’s confidence in the quality of Gemini’s output.
– Blackledge has reiterated an Outperform rating on Alphabet’s stock with a price target of $165, indicating potential upside of 12%.
Goodbye Bard, hello Gemini. Last week, Alphabet (NASDAQ:GOOGL) provided an update regarding its LLM (Large Language Model) endeavors, which included a rebranding of its AI chatbot from Bard to Gemini. In the same vein as competitor OpenAI’s ChatGPT, the company will now offer a tiered subscription service for the bot.
The updated Gemini will offer different levels of service, ranging from a basic free option to the top-tier Ultra 1.0 package priced at $19.99 per month. Google states that the Ultra version, which utilizes the Gemini Advanced AI model, will excel in intricate tasks like programming, creative teamwork, and logical analysis and says that its unique tiers and models will differentiate it from competitors.
According to the company’s benchmarks, Gemini has surpassed GPT-4V (GPT-4 with vision) on different levels, including college-level reasoning problems, optical character recognition, document comprehension, speech recognition, and more. The bot will also be available through a standalone Android app called Gemini and is set to be accessible through the standard Google app on iOS in the upcoming weeks.
The latest update offers plenty of good news for investors, says TD Cowen 5-star analyst, John Blackledge. “Net-net,” said Blackledge, “we are positive on GOOG announcement, in particular as we believe the new offering of a Gemini-based paid subscription product (Google One AI Premium) supports the notion that GOOG is confident enough in the quality of output to charge consumers a monthly fee. As a reminder, OpenAI and Microsoft already offer multiple subscription-based services that include access to OpenAI’s GPT-4 LLM.”
Gemini’s capabilities were initially demonstrated in a December 2023 announcement and at the same time, the company emphasized its adherence to safe and responsible development. Apart from integrating classifiers to screen out malicious content, Google has also collaborated with third parties to rigorously test the model. “This aligns with GOOG’s commitment to the responsible deployment of AI,” says Blackledge. “In our view, this is a key theme that emphasizes GOOG’s cautious rollout of GenAI products in ’23.”
All told, Blackledge reiterated an Outperform (i.e., Buy) rating on GOOGL shares to go alongside a $165 price target. That figure factors in 12-month growth of 12% from current levels. (To watch Blackledge’s track record, click here) Blackledge’s objective closely mirrors that of the Street’s; the average target currently stands at $164.56 and represents upside of ~13%. Rating wise, based on a mix of 29 Buys vs. 8 Holds, the stock claims a Strong Buy consensus rating. (See Alphabet stock forecast)