TOP STORY
🤖 Google Stock Jumps After Unveiling a 'Dizzying Array' of New AI Features

😰 After a nice green week in the markets last week, spurred by a 90-day US-China tariff pause, the markets are back in the red after Trump threatened a 50% tariff on the EU, saying:

📊 Across the key indexes:

• The S&P 500 is down -1.7%

• Nasdaq-100 is down -1%

• and Bitcoin jumped +3.2%, hitting a new all-time high on Thursday

🔍 But rather than talk more about tariffs (as really, who knows what’s going on at this point) - let’s take a look at one stock that soared as the market fell…

📈 Google Jumps 2% After Releasing 100 New AI Features

📉 2 weeks ago, we talked about how Google’s stock dropped 7% after an Apple Exec said AI will replace search and that Google’s search volume was on the decline, raising concerns about the threats to Google’s search business…

🤯 But those worries were put to rest (or at least reduced) this week after Google unveiled "a dizzying array of new AI features” at its I/O developer conference, driving a +2.3% increase in the stock price.

📣 On Google’s blog, you can find the full list of the 100 announcements they made, including:

• 👩‍💻 3D video calling with Google Beam

• 👕 Google Shopping AI try-on that lets you see how clothes look on you based on an uploaded photo

• 💡 An enhanced reasoning mode for Gemini 2.5 Pro

• 🤖 A more ‘proactive’ AI assistant (i.e. pointing out a mistake in your homework without you asking for it)

• 💌 Gmail smart replies using info from your other emails to sound more like you, and taking the recipient’s tone into account

• 🌐 AI speech translation on Google Meet

• 👓 Google XR Smart Glasses with Gemini assistance and which, unlike Meta Smart Glasses, have an in-lens display that can show directions and other useful info overlayed over your surroundings

• Jules, an asynchronous coding agent that helps developers write tests, fix bugs, and even build new features

As if that list isn’t enough already, there were two more announcements that really stood out for investors:

🎥 Veo 3: Audio Meets Video

🤯 The internet has been going absolutely wild over Google’s new video model Veo 3, which can generate extremely realistic videos with voice, sound effects, and background noise…

Some of the examples Google shared are seriously impressive, with some commentators calling it “the end of Hollywood”. Google coupled this with a new AI filmmaking app called Flow with scene-building tools to stitch clips together and create longer AI videos.

🤑 To monetize these new features, Google has bundled many of the new AI features into a $250/month Google AI Ultra subscription (including Flow).

🔍 AI Mode for Search

🤖 Finally, with nearly 60% of Google’s revenue coming from Google Search, one of the most significant announcements was Google’s new “AI Mode.”

This will be a new tab on Google that lets you search the web with the Gemini AI chatbot. Up until now, Google has integrated AI into search via its ‘AI Overviews’, which show up at the top of the Google search results, so this is a notable move to a more Chatbot-like experience (which seems quite similar to ChatGPT)…

🤿 Ok - what does all this mean for investors? Let’s take a look at how analysts are reacting to the news… but first, a quick word from this week’s sponsor, State Street Global Advisors!

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^{*See State Street Global Advisors Investments Disclaimer at the end of the newsletter}

TOP STORY CONT.
⭐️ Analysts Celebrate Google’s AI Announcements, Raising Price Targets

🔦 While only a few weeks ago (when Google dropped -7%), many analysts were hinting that Google’s time in the spotlight may be over, the tone has now completely shifted.

🤑 After the announcements, analysts rushed to increase their price targets with Google now rated a ‘Strong Buy’ with an average analyst target of ~$198, 17% above the current price.

Here’s what some of the analysts had to say:

😰 2 weeks ago, I talked about AI’s threat to Google’s search monopoly. But some of the analysts touched on this directly, implying that AI may actually help Search and not hurt it…

It’s worth noting that not everyone was convinced, with some analysts like Andrew Boone from Citizens saying, “Google will continue to offer an inferior search product to ChatGPT’s as we worry that Google search revenue faces headwinds over the next few years.”

🙋‍♂️ My Thoughts

This is a tough one… while researching for this write-up, I was seriously impressed by Google’s insane new feature roll-out. In contrast to Apple’s over-promising and under-delivering, Google’s AI roll-out really seems like the real deal…

That said, I still can’t shake the thought that Google is a $2T company that has operated with >90% market share for basically 2 decades, and even if AI is expanding the pie, there are now far more real competitors fighting for that pie…

😬 The bottom line is - Google is going through a shake-up - and the next few years will be a critical test for the company on whether it can come out on top or be left in the dust. As one analyst puts it, this could present an opportunity, but it is not for the faint of heart:

🌼 But enough of my thoughts, super curious to hear what you all think! To join the discussion on Blossom, check out @jacobb’s post along with his GOOGL bull thesis here!

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ALSO IN THE NEWS
🗞️ Other Key Headlines this Week

📉 Apple Stock Down 6% After Trump Threatens 25% Tariffs on iPhones Not Made in the US

• Apple (AAPL) stock dropped -6% after Donald Trump said he would impose a 25% tariff on iPhones not built in the U.S.

• Many analysts have called out that a US-made iPhone is ‘impossible’. Wedbush’s Dan Ives says a US-made iPhone would cost $3,500 and that it would cost Apple $30B to move just 10% of its supply chain.

• Trump added that he would impose the same tariffs on Samsung and other smartphone makers to ensure fairness.

• In Apple’s recent earnings, it already flagged an expected $900M hit to move production from China to India and Vietnam to avoid Tariffs, so the potential new 25% tariff was a surprise for investors and hurt the already struggling stock (Apple is now down 20% year-to-date).

💽 Oracle Announces Plans to Spend $40B on Nvidia Chips for Texas Data Centres

• Oracle ($ORCL) announced it will spend $40 billion on Nvidia (NVDA) chips to power a major expansion of its AI cloud infrastructure in Texas.

• The chips—likely Nvidia’s current H100s and next-gen Blackwell GPUs—will support large-scale data centers designed for AI model training and inference.

• With Nvidia’s earnings coming up on Wednesday, this is a strong early signal that AI spending is not easing up. Tech giants were estimated to spend $300B on AI Capex this year, so this new $40B is a significant increase.

• Despite the news, both Oracle and Nvidia fell this week, -1.5% and -1% respectively.

📈 Stock Trading App eToro IPOs on the Nasdaq, Jumping 29%

• eToro ($ETOR) jumped +29% on its first day of trading after finally going public via a direct listing on the Nasdaq.

• eToro started as a copy-trading platform but has evolved into a full-service brokerage with over 35 million registered users globally, with strong traction in Europe, Asia, and the Middle East.

• This follows up Webull’s IPO a few weeks back and cements a rebound in US IPOs as many had delayed listing due to tariff-uncertainty.

• eToro reported $192M in net income for 2024, up from $15.3 million the prior year - giving it a price-earnings ratio of 28x (compared to Robinhood, which sits at 36x)

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

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