On Monday, UBS reiterated its Neutral rating on Alphabet Inc. (NASDAQ:GOOGL) with a steady price target of $173.00. The firm anticipates new product releases at the upcoming Google Marketing Live (GML) 2024 event, which is expected to highlight Google's advancements in generative AI technology.
The focus will likely be on how this technology can be applied more broadly across different sectors and throughout various parts of the value chain.
The firm is interested in seeing Google's continued efforts in automating not just the ad-buying process, such as with its Performance Max tool, but also in the creation of ad content. UBS notes that while these strategic directions are not new, with products like SmartBidding and Responsive ads already in place, Google's Gemini multimodal model presents further opportunities.
The model could potentially help marketers to produce video and display ad creatives more quickly and efficiently, potentially extending Performance Max's capabilities, particularly in supporting YouTube.
UBS is also looking for updates on the performance of Google Search’s AI features, which are now broadly available across the United States. The firm is interested in the impact these features have on the search engine results page (SERP) and how they might affect advertisers' return on ad spend (ROAS).
The report mentions the challenge advertisers face in balancing organic and sponsored content, as well as ad placement, which could lead to varying ROAS outcomes.
The analysis points out that despite these challenges, there is a lack of scaled alternatives with comparable user bases and geographic reach that could vie for marketing dollars, indicating a competitive advantage for Google in this space.
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