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Alphabet (GOOGL) Boosts Ad Business With New AI-Backed Features
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Alphabet’s (GOOGL - Free Report) Google is constantly making efforts to strengthen its advertisement (ad) business and improve its search results with the support of AI.
This is evident from the latest launch of two new AI-backed features to boost automation in its advertisement business, which will help advertisers achieve specific goals for their ads.
One of the features called Demand Gen is designed to take care of the placement of ads, thus automating the process that advertisers were previously required to think about.
The feature would place the photo and video ads of an advertiser across Gmail, YouTube feed and Shorts.
Meanwhile, another feature is designed to increase the views of an advertiser’s video ads by ensuring the right placement of these ads.
We believe the latest move is likely to aid Google in attracting several advertisers to its platform, which will likely bolster its advertisement business.
Apart from the new AI-powered features, Google recently developed a new tool, the Ads Transparency Center, designed to enable users to know about the advertisements (ads) they see on Search, YouTube and Display.
It will act like a searchable hub for all ads served by verified advertisers. Moreover, it will show the ads served in the last 30 days from the company’s list of verified advertisers.
This tool bodes well for Google’s growing efforts toward making its advertisement business, which is the cash cow of Alphabet, more transparent.
The company also added new features to strengthen its Discovery ads. The features include product feeds and various layouts, product-level reporting, data-driven attributions, maximum conversions and conversion lift experiments.
Coming to YouTube ads, the company recently unveiled the YouTube Cost-Per-Hour Masthead, which complements the existing Cost-Per-Impression Masthead, to provide advertisers full share-of-voice during the hours.
In addition, the company is testing new designs to improve the organization of a product ad to help large and small businesses reach their goals. The design updates include a new navigation menu, a reorganized interface and a refreshed look and feel.
We believe the abovementioned efforts are expected to contribute generously to the performance of Google’s advertisement business, which has been suffering from a slowdown in digital advertising for the past few quarters.
In first-quarter 2023, total Google advertising revenues fell 0.2% year over year to $54.5 billion and accounted for 78.2% of the total revenues.
Moreover, growing prospects for the advertising business will likely drive growth in Google Services revenues, which will benefit Alphabet’s overall performance and likely instill investors’ optimism in the stock.
For 2023, the Zacks Consensus Estimate for the company’s total revenues is pegged at $248.3 billion, indicating growth of 6.2% from 2022.
Coming to price performance, GOOGL has gained 40% in the past year compared with the industry’s growth of 39.8%.
Zacks Rank & Stocks to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold).
Image: Bigstock
Alphabet (GOOGL) Boosts Ad Business With New AI-Backed Features
Alphabet’s (GOOGL - Free Report) Google is constantly making efforts to strengthen its advertisement (ad) business and improve its search results with the support of AI.
This is evident from the latest launch of two new AI-backed features to boost automation in its advertisement business, which will help advertisers achieve specific goals for their ads.
One of the features called Demand Gen is designed to take care of the placement of ads, thus automating the process that advertisers were previously required to think about.
The feature would place the photo and video ads of an advertiser across Gmail, YouTube feed and Shorts.
Meanwhile, another feature is designed to increase the views of an advertiser’s video ads by ensuring the right placement of these ads.
We believe the latest move is likely to aid Google in attracting several advertisers to its platform, which will likely bolster its advertisement business.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Advertisement Business in Focus
Apart from the new AI-powered features, Google recently developed a new tool, the Ads Transparency Center, designed to enable users to know about the advertisements (ads) they see on Search, YouTube and Display.
It will act like a searchable hub for all ads served by verified advertisers. Moreover, it will show the ads served in the last 30 days from the company’s list of verified advertisers.
This tool bodes well for Google’s growing efforts toward making its advertisement business, which is the cash cow of Alphabet, more transparent.
The company also added new features to strengthen its Discovery ads. The features include product feeds and various layouts, product-level reporting, data-driven attributions, maximum conversions and conversion lift experiments.
Coming to YouTube ads, the company recently unveiled the YouTube Cost-Per-Hour Masthead, which complements the existing Cost-Per-Impression Masthead, to provide advertisers full share-of-voice during the hours.
In addition, the company is testing new designs to improve the organization of a product ad to help large and small businesses reach their goals. The design updates include a new navigation menu, a reorganized interface and a refreshed look and feel.
We believe the abovementioned efforts are expected to contribute generously to the performance of Google’s advertisement business, which has been suffering from a slowdown in digital advertising for the past few quarters.
In first-quarter 2023, total Google advertising revenues fell 0.2% year over year to $54.5 billion and accounted for 78.2% of the total revenues.
Moreover, growing prospects for the advertising business will likely drive growth in Google Services revenues, which will benefit Alphabet’s overall performance and likely instill investors’ optimism in the stock.
For 2023, the Zacks Consensus Estimate for the company’s total revenues is pegged at $248.3 billion, indicating growth of 6.2% from 2022.
Coming to price performance, GOOGL has gained 40% in the past year compared with the industry’s growth of 39.8%.
Zacks Rank & Stocks to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Palo Alto Networks (PANW - Free Report) , NVIDIA (NVDA - Free Report) and AMETEK (AME - Free Report) . Palo Alto Networks and NVIDIA sport a Zacks Rank #1 (Strong Buy), and AME carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Palo Alto Networks shares have gained 76.7% in the year-to-date period. The long-term earnings growth rate for PANW is projected at 31.5%.
NVIDIA shares rallied 192.2% in the year-to-date period. Its long-term earnings growth rate is projected at 23.02%.
AMETEK shares have increased 12% in the year-to-date period. The long-term earnings growth rate for AME is projected at 8.95%.