Alphabet’s AI Focus in 2025

In 2025, Google’s parent company, Alphabet, largely concentrated on integrating AI into various business sectors.

Gemini progressed steadily, while advertising remained strong and users picked up new functionalities. YouTube, for instance, has become a lot more user-friendly and intelligent with its tools, shifting more attention to short-form content.

Yet, it hasn’t all been smooth sailing.

Some policy issues and product resets threatened to overshadow the progress. Still, Google’s widespread reach—billions of users—along with a robust user engagement pattern, is something few can rival. When Google introduces a new interface, changes in user engagement and revenue are likely to follow swiftly.

This backdrop sets the stage for insights from Bank of America, which seems to shake up the usual narrative around “larger models mean more diversity.”

Analysts suggest that there are various factors within Alphabet that could gradually enhance user engagement, expand applications, and present monetization opportunities that Wall Street hasn’t fully considered. If early indicators hold, revenue could increase significantly. It’s not just about how you execute; it’s really about where you execute, which is, well, the key point.

Bank of America’s Justin Post has, in a way, shifted the conversation around Google’s AI initiatives.

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In his recent commentary, he upheld a buy recommendation with a price target of $252, which is roughly 3% higher than Thursday’s closing price. However, his argument isn’t rooted in Gemini’s intelligence but rather what could unfold as users begin to scroll more.

Post contends that Gemini has transitioned from a simple chat interface to a visually-driven layout, resembling popular platforms like TikTok or Reels more than traditional chatbots.

He adds, “A more visual, feed-based design could boost engagement, particularly among mobile users accustomed to scrolling.” More time spent within the app could provide more avenues for monetization without waiting for improved model performance.

Furthermore, this vertical layout opens up space within the Gemini app for ads, premium features, and ways for creators to discover styles. Post sees this as a growth strategy driven by user interface changes that can lead to tangible results. If Google successfully integrates this feed into platforms like Android, Chrome, and Gmail, it could enhance user engagement and drive sales significantly.

Still, he points out a potential risk in changing user habits and losing the ease of interaction that users find with ChatGPT. But considering Google’s vast reach and its YouTube foundation, this monetization test is something that Wall Street is adept at measuring.

Other Analyst Calls:

• HSBC (Buy, $285): Optimistic about Gemini and its “Ironwood” chip integration across search, cloud, and YouTube.
• TD Cowen (Buy, raised target from $270 to $280): Strong search performance and positive cloud momentum going into Q3.
• Wells Fargo (equal weight, adjusted target from $187 to $236): Sees considerable upside but remains cautious due to uncertainties in short-term search performance.

Visual AI is rapidly evolving from a social media accessory to a fundamental component of content feeds.

Last month, OpenAI’s Sora video application ascended to the top spot, reinforcing the belief that AI-generated video is gaining traction.

YouTube Shorts now performs as well as long-form content in terms of monetization per watch hour in the U.S., while TikTok, boasting over 200 million users in Europe, is on track to capture a significant portion of U.S. social advertising expenditures this year.

Underlying this, the platform seamlessly integrates generated videos into its ecosystem.

Google’s Veo 3 is now integrated into YouTube Shorts, offering a new “fast” mode tailored for soundscapes and quick mobile video creation.

Gemini’s playful “Nano Banana” functionality allows users to create videos and images easily, showcasing the integration between Android and Chrome.

Additionally, tools like Adobe Firefly are beginning to generate more complex content, with users creating around 1.4 billion AI images through Canva last year. As the market for generative AI is predicted to explode, projected sales could hit $71 billion by 2025 and soar to $890 billion by 2032.