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Google harnesses AI technology to its advantage

Sijoitustieto
16 Apr 2024 | 2 min read

In the financial media dominated by artificial intelligence, there has been debate about whether Google is at the forefront of the techno sector or at the tail end of generative artificial intelligence (AI). It is clear that AI presents both challenges and opportunities for Google stock.

Google's share Alphabet has made recent highs after the inflation scare that followed the pandemic.

Source: Investing.com. Price in US dollars. Historical returns are not a reliable indicator of future returns.

One of the biggest questions regarding Google stock is the impact of the integration of AI on Google's search advertising revenue.

Last week, the company announced the launch of Google Vids, which is an AI-powered video production platform. It aims to facilitate the ability of marketing and advertising professionals to write, produce and edit videos. "Vids will be part of the Docs, Sheets and Slides collection and will include a simple and easy-to-use platform, as well as the ability to securely share the project directly from the browser," Google says in its announcement.

At the same time, Google announced that semiconductors will be manufactured in-house in the future. As a result, the company launches Google Axion, a new computer based on ARM processors for its data center. The company says Axion produces 50 percent better performance and 60 percent better energy efficiency compared to the current x86 cloud processor.

Helped by the news, Google's stock rose to nearly $162 last week, an all-time high for the stock. At the same time, Google's market value is around two trillion dollars, only Apple, Microsoft, Nvidia and Saudi Arabia's Aramco have reached this achievement.

The stock is up about 13 percent this year and 77 percent higher than the closing price of 2022. The reason behind the increase is record high revenues based on persistent advertising income. Investors are optimistic about the company's ability to generate additional revenue thanks to AI, with Alphabet's P/E (price-to-earnings) ratio at its highest level in two years, indicating the market's willingness to bet on Google's unrealized earnings potential.

Vontobel’s TLNG GOOG V128-turbo offers a leveraged product to seek returns on Alphabet's rising stock price. At the time of writing, the leverage of the product is 3.89 times, which corresponds to the 3.89 percent yield of the leveraged product when the Alphabet stock rises by one percent. If, contrary to expectations, the share price falls by one percent, the leveraged product will incur a loss of 3.89 percent.

With Vontobel's leveraged products, you can also aim for a return on Alphabet's falling stock price. TSRT GOOG V158-turbo offers a 5.72x leverage to the stock's return at the time of writing. If Alphabet's stock falls by one percent, the leveraged product produces a profit of 5.72 percent. Turbo's value, on the other hand, decreases by 5.72 percent if Alphabet's share price rises by one percent.

Vontobel's investment products can be traded during the opening hours of the Helsinki Stock Exchange. When trading leveraged products, the risk of loss increases. Losing the entire invested capital is possible. Alphabet's share, which is the target asset, is quoted in US dollars, so the yield of the leveraged product also depends on the price changes of the EUR/USD currency pair. Investors bear Vontobel's credit risk when investing in Vontobel's products.

Risks

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