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Alphabet (GOOGL) Unveils New AI Features for Google Photos

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Alphabet’s (GOOGL - Free Report) Google recently added new artificial-intelligence (AI)-powered features to Google Photos to enhance photo organization and categorization for users.

Notably, one of the features called Stacks uses AI to select the best photo from a group of photos, reducing clutter in users’ Photos gallery.

Further, this feature allows Google Photos to automatically organize users’ galleries by grouping similar photos close together using visual similarity signals, making it easier for them to find and organize their photos.

Another AI-powered feature to identify, categorize and set reminders for images like screenshots and documents has been added to the list of updates, enabling users to easily find their images later.

Alphabet is likely to bolster its Google Services segment on the back of its latest move.

Growing Focus on AI

We mark the latest move as Alphabet’s growing efforts to integrate AI into its products and services.

Notably, Google introduced two AI-aided shorts creation features to YouTube, namely Dream Screen and YouTube Create, enhancing the user experience for creators on smartphones.

It also announced the potential release of AI-powered insights for YouTube Studio, which will be tailored to each channel and based on current audience activity.

Additionally, Alphabet is in talks to invest hundreds of millions in Character.AI, an AI chatbot start-up, to train models and meet user demand.

We believe that the above-mentioned endeavors are likely to strengthen Alphabet’s presence in the booming AI market.

Per a Fortune Business Insights report, the global AI market size is expected to hit $515.3 billion in 2023 and reach $2.02 trillion by 2030, exhibiting a CAGR of 21.6% between 2023 and 2030.

Growing prospects in the promising AI market are expected to aid Alphabet in winning investors’ confidence in the near term.

The company has gained 52.6% on a year-to-date basis compared with the industry’s growth of 52%.

Strengthening Google Services

Apart from the latest move, Alphabet’s Google updated over 20 first-party apps for large screens, enhancing Android tablet users' experience with features like dual-column User Interface and leveraged search results.

Further, Google introduced a new text formatting feature in its Android and web note-taking application, Google Keep, allowing users to use bold or italicized text, split thoughts into sections and use header options.

Additionally, Alphabet introduced 18 automation features to its Google Home application, allowing users to use signals from smart home devices, sensors, and electric vehicles.

All the above-mentioned endeavors bode well for the company’s increasing efforts to bolster the Google Services segment, which accounts for Alphabet’s majority of total revenues.

In third-quarter 2023, Google Services’ revenues increased 10.8% year over year to $67.99 billion, accounting for 88.6% of total revenues.

Our model projects fourth-quarter 2023 Google Services revenues at $72.79 billion, indicating growth of 7.3% from 2022.

We believe momentum in the underlined segment will likely aid its overall financial performance in the upcoming period.

Our model estimate for fourth-quarter 2023 total revenues stands at $81.95 billion, indicating year-over-year growth of 7.8%.

Zacks Rank & Stocks to Consider

Currently, Alphabet carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Badger Meter (BMI - Free Report) , Arista Networks (ANET - Free Report) and Salesforce (CRM - Free Report) . While Badger Meter sports a Zacks Rank #1 (Strong Buy), Arista Networks and Salesforce carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Badger Meter shares have gained 35.9% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.

Arista Networks shares have gained 71.2% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 20.4%

Salesforce shares have gained 65.5% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 22.54%.

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