Google is making moves to strengthen its AI presence.

At the recent Gemini at Work event, the company highlighted a 35-fold increase in the usage of its Gemini platform, a generative artificial intelligence chatbot. The event featured 185 AI integration examples across various enterprises, from healthcare providers to car makers to retailers.

For example, Volkswagen  (VWAGY)  of America has integrated Google Cloud's AI into its myVW mobile app, where drivers can explore their owners’ manuals and ask questions like “how to change a flat tire.”

Snap  (SNAP)  has collaborated with Google Cloud, too. The social media giant is using Google's AI technology to enhance its My AI chatbot on Snapchat. This partnership allows Snap to offer more interactive features, utilizing Gemini's ability to process text, audio, images, and video.

Warner Bros.  (WBD)  have also deployed an AI-powered captioning solution using Google Cloud's Vertex AI platform, which reduces the time and cost of captioning while improving accuracy for unscripted programming.

Generative AI is driving growth in the cloud computing market, where Google ranks third behind Amazon and Microsoft. Global enterprise spending on cloud infrastructure services in Q2 hit $79 billion, up 22% year-over-year, according to Synergy Research Group.

Amazon now leads the market with a 32% share, while Google, with 12%, is gaining momentum alongside Microsoft as of Q2 2024.

Related: Analysts rethink Amazon stock price targets after earnings

Google's recent earnings: strong performance amidst AI growth

Alphabet  (GOOGL) , Google's parent company, recently reported strong growth in its cloud segment, reflecting strong AI demand.

The company’s latest Q2 financial report in July showed earnings per share of $1.89, slightly above the $1.84 forecast. Revenue hit $84.74 billion, up 14% year-over-year, surpassing analyst expectations of $84.19 billion.

Google's advertising segment, which includes Google search and Youtube ads, continues to account for the largest portion of total revenue. The segment generated $64.6 billion for the quarter, accounting for 76% of total revenue and reflecting an 11% year-over-year growth.

Related: Analysts reset Alphabet stock price target before key September court event

The cloud segment, though representing only 12.2% of total revenue, experienced significant growth, with revenue rising 28% year-over-year to $10 billion. The surge reflects the growing adoption of AI across enterprises and consumers.

Alphabet highlighted its accelerated efforts in AI in July’s earnings release, with advancements being developed across Google Research and Google DeepMind. “We are innovating at every layer of the AI stack,” said CEO Sundar Pichai.

However, the U.S. Justice Department is worried that Google's strong position in search could lead to an unfair advantage in AI development. It is running an antitrust trial against Google, which started in early September.

The DOJ is considering restrictions on Google’s use of website content for AI products, as well as spinning out its Chrome browser or Android operating system, according to a Bloomberg report.

Analysts have mixed views on Alphabet's future

Analysts have recently responded to Google's AI advancements with mixed reactions.

Tigress Financial on Sept. 26 raised Alphabet's price target to $220 from $210 and keeps a strong buy rating, citing ongoing strength in Google’s search and cloud segments, according to thefly.com.

The analyst expects Gemini generative AI to keep fueling revenue and cash flow growth and highlights that the raised price target indicates a potential return, including dividends, of over 36% from current levels.

JMP Securities analyst Andrew Boone reaffirmed positive views following the Gemini event, maintaining an outperform rating and a $200 price target on Alphabet shares.

Oppenheimer, on the other hand, has lowered its price target for Alphabet from $210 to $185 with an outperform rating.

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The firm notes that while the impact of Google Search being labeled a monopoly is uncertain, investors are factoring in the potential loss of exclusivity with Apple  (AAPL) , likely limiting Alphabet's price-to-earnings ratio to 20 times.

Currently, Google earns 31% of its gross search revenue from Apple devices and pays 36% to Apple for this exclusivity, which results in 19% net ad exposure, the analyst says.

Alphabet stock is up 17.8% year-to-date as of Sept. 26, while the S&P 500 Index is up more than 21% in the same period.

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