Google AI Event Wins, Nio Gets JPMorgan Nod to $5.40

Alphabet reinforces AI leadership at Google I/O, Nio upgraded by JPMorgan, signaling strong AI and EV market movements.

By Alex P. Chase

5/15, 05:59 EDT
Alphabet Inc.
NIO Inc.

Key Takeaway

  • Alphabet Inc. reinforces AI leadership with positive analyst calls post-I/O event; Goldman Sachs sets $195 target, stock up 22% in 2024.
  • Nio upgraded to neutral by JPMorgan with a new price target of $5.40, reflecting an improving outlook and potential Chinese government stimulus.
  • Google's I/O highlights include Gemini AI model updates and new AI hardware, Trillium, for cloud customers, showcasing rapid AI tool deployment.

Alphabet's AI Leadership Reinforced

Alphabet Inc. has solidified its position as a leader in artificial intelligence (AI) following its I/O developer event, according to Goldman Sachs analyst Eric Sheridan. Sheridan's optimism stems from Alphabet's strategic positioning in key end markets, driven by its AI/machine learning capabilities. He highlighted the importance of integrating AI features into products for widespread adoption. Alphabet's unveiling of updates to its Gemini AI model and new search features, including AI Overviews, was well-received, with Sheridan reiterating a buy rating and a $195 per share price target. Oppenheimer's Jason Helfstein and Jefferies' Brent Thill also praised Alphabet's competitive stance in AI, emphasizing its extensive R&D resources, data library, and machine learning focus. Alphabet's stock has seen a 22% increase in 2024.

Nio's Outlook Improves

JPMorgan upgraded Chinese electric vehicle maker Nio to neutral from underweight, as analyst Nick Lai sees an improving but still uncertain outlook for the company. Lai raised his price target on Nio to $5.40 per share, anticipating a 6% decline over the next year despite a recent 48% surge in the stock price. The upgrade was influenced by potential Chinese government stimulus policies and Nio's battery as a service (BaaS) strategy, which has boosted sales momentum by lowering monthly rental fees. Nio's stock rose more than 3% in premarket trading following the upgrade.

Google I/O Highlights AI Innovations

At its annual I/O developer conference, Google announced a range of AI products, from new search and chat features to AI hardware for cloud customers. The event showcased Google's rapid deployment of AI tools to compete with firms like OpenAI. Google's Gemini AI model updates and the introduction of AI Overviews in Google Search were among the key announcements. Google also revealed plans for its sixth-generation tensor processing unit, Trillium, available to Cloud customers in late 2024. These developments underscore Google's commitment to advancing AI technology across its services.

Alphabet's AI Event and Market Impact

Alphabet Inc.'s Google I/O developers conference was a pivotal moment for the company to demonstrate its AI capabilities amidst competition from Apple and Microsoft-backed OpenAI. The event, which followed a strong earnings report and a $70 billion buyback program, aimed to bolster Alphabet's leadership in AI. Despite past challenges with AI applications, the accelerated adoption of Alphabet's Gemini AI engine suggests significant growth opportunities. The conference's success in showcasing new AI features could reinforce Alphabet's position as a key player in the AI landscape.

Street Views

  • Eric Sheridan, Goldman Sachs (Bullish on Alphabet):

    "We came away increasingly constructive on Alphabet’s long-term strategic positioning in a number of key end markets and continue to see the company as the leading collection of AI/machine learning-driven businesses in our coverage universe... In our view, as the AI large language (foundational) model layer shows less incremental improvements with each iteration, we see the best-positioned companies as those that can seamlessly integrate AI features into consumer-facing and enterprise-facing products to generate wide-scale adoption."

  • Jason Helfstein, Oppenheimer (Bullish on Alphabet):

    "Relative to OpenAI’s limited product demo the day before, we believe GOOG demonstrated its strong competitive position, driven by an essentially unlimited R&D budget, access to the largest user & data library, and 10 years of machine learning focus."

  • Brent Thill, Jefferies (Bullish on Alphabet):

    "We believe generative AI will ultimately give GOOGL an expanded role in search, as ‘Google will [now] do the Googling for you.’"

  • Nick Lai, JPMorgan (Neutral on Nio):

    "The outlook for Nio is improving but it's still murky... Chinese government stimulus policy to boost auto demand including NEV which NIO should also benefit from; and NIO’s latest battery as a service (BaaS) strategy by lowering buyers’ monthly rental fee (by ~25%) has not only successfully boosted store traffic and BaaS take rate ... but also driven its sales momentum."