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Alphabet (GOOGL) Aids Advertisers With AI-Powered Feature
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Alphabet’s (GOOGL - Free Report) Google added a new artificial-intelligence (AI)-powered feature, Spotlight Moments, to YouTube for advertisers.
Notably, the newly launched advertising package uses Google AI to identify popular videos related to specific cultural moments.
This enables advertisers to display personalized ads on branded YouTube channels featuring videos related to a specific topic or event.
Also, the new launch adds to the portfolio of AI-powered YouTube campaigns, including Video Reach and Video View campaigns, leveraging Google AI into its consumer-facing products.
We note that the above feature addition is likely to help the company gain strong traction among advertisers, which, in turn, will boost YouTube’s user base.
This will likely drive growth in YouTube’s advertising revenues and, consequently, in Google’s advertising revenues. This, in turn, will aid the Google Services segment’s performance.
Notably, YouTube advertising revenues improved 4.4% year over year to $7.7 billion in the second quarter of 2023.
Further, total Google advertising revenues increased 3.3% year over year to $58.14 billion and accounted for 77.9% of the total revenues.
Google Services accounted for 88.8% of total revenues in the same quarter. Revenues from this business increased 5.5% year over year to $66.3 billion.
Our model estimate for 2023 revenues from the Google Services segment is pegged at $2.67 billion, up 5.3% year over year.
Delivering Advertising Experience With Generative AI
The latest move is in sync with Alphabet’s growing efforts to integrate generative AI into advertising.
Notably, it introduced a new, natural-language conversational experience in Google Ads, aiming to streamline campaign creation and enhance search ads by combining individual expertise with AI.
Further, Alphabet integrated generative AI into automatically created assets, allowing it to create and adapt Search ads based on query context, improving its ability to generate headlines and descriptions.
Additionally, Google Ads integrated generative AI into image creation, allowing advertisers to create images directly within the web interface for Performance Max campaigns.
Also, Alphabet inculcated ads into its Search Generative Experience, an AI-powered conversational search feature, helping advertisers to query the search engine in a conversational way.
All these launches will position the company well in the global digital advertising market.
Per an EMR report, the digital advertising market is expected to witness a CAGR of 13.1% between 2024 and 2032.
Solid prospects for Alphabet in this booming market are likely to continue instilling investor optimism in the stock.
Notably, the company has gained 58.4% on a year-to-date basis compared with the industry’s growth of 55.4%.
Moreover, the above-mentioned endeavors are expected to provide Alphabet with a competitive edge over its biggest competitor in the advertising world, namely, Meta Platforms (META - Free Report) , which is also making concerted efforts to capitalize on growth opportunities present in the advertising space.
Meta Platforms announced the rollout of generative AI tools for all advertisers. These tools are designed to enable advertisers to create compelling content using AI.
Further, the new AI-powered features, which include Background Generation, Image Expansion and Text Variations, enhance productivity and personalization for advertisers, bolstering their business experiences.
Image: Bigstock
Alphabet (GOOGL) Aids Advertisers With AI-Powered Feature
Alphabet’s (GOOGL - Free Report) Google added a new artificial-intelligence (AI)-powered feature, Spotlight Moments, to YouTube for advertisers.
Notably, the newly launched advertising package uses Google AI to identify popular videos related to specific cultural moments.
This enables advertisers to display personalized ads on branded YouTube channels featuring videos related to a specific topic or event.
Also, the new launch adds to the portfolio of AI-powered YouTube campaigns, including Video Reach and Video View campaigns, leveraging Google AI into its consumer-facing products.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Alphabet to Benefit From the Move
We note that the above feature addition is likely to help the company gain strong traction among advertisers, which, in turn, will boost YouTube’s user base.
This will likely drive growth in YouTube’s advertising revenues and, consequently, in Google’s advertising revenues. This, in turn, will aid the Google Services segment’s performance.
Notably, YouTube advertising revenues improved 4.4% year over year to $7.7 billion in the second quarter of 2023.
Further, total Google advertising revenues increased 3.3% year over year to $58.14 billion and accounted for 77.9% of the total revenues.
Google Services accounted for 88.8% of total revenues in the same quarter. Revenues from this business increased 5.5% year over year to $66.3 billion.
Our model estimate for 2023 revenues from the Google Services segment is pegged at $2.67 billion, up 5.3% year over year.
Delivering Advertising Experience With Generative AI
The latest move is in sync with Alphabet’s growing efforts to integrate generative AI into advertising.
Notably, it introduced a new, natural-language conversational experience in Google Ads, aiming to streamline campaign creation and enhance search ads by combining individual expertise with AI.
Further, Alphabet integrated generative AI into automatically created assets, allowing it to create and adapt Search ads based on query context, improving its ability to generate headlines and descriptions.
Additionally, Google Ads integrated generative AI into image creation, allowing advertisers to create images directly within the web interface for Performance Max campaigns.
Also, Alphabet inculcated ads into its Search Generative Experience, an AI-powered conversational search feature, helping advertisers to query the search engine in a conversational way.
All these launches will position the company well in the global digital advertising market.
Per an EMR report, the digital advertising market is expected to witness a CAGR of 13.1% between 2024 and 2032.
Solid prospects for Alphabet in this booming market are likely to continue instilling investor optimism in the stock.
Notably, the company has gained 58.4% on a year-to-date basis compared with the industry’s growth of 55.4%.
Moreover, the above-mentioned endeavors are expected to provide Alphabet with a competitive edge over its biggest competitor in the advertising world, namely, Meta Platforms (META - Free Report) , which is also making concerted efforts to capitalize on growth opportunities present in the advertising space.
Meta Platforms announced the rollout of generative AI tools for all advertisers. These tools are designed to enable advertisers to create compelling content using AI.
Further, the new AI-powered features, which include Background Generation, Image Expansion and Text Variations, enhance productivity and personalization for advertisers, bolstering their business experiences.
Zacks Rank & Stocks to Consider
Currently, GOOGL carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Applied Materials (AMAT - Free Report) and Arista Networks (ANET - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Applied Materials have gained 46.6% in the year-to-date period. AMAT’s long-term earnings growth rate is currently projected at 6.10%.
Arista Networks shares have gained 61% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 18.75%.