Alphabet (GOOG 1.46%) (GOOGL 1.34%) stock advanced in artificial intelligence (AI) today, announcing that the companyâs Gemini personal AI assistant software is coming soon to a smartwatch near you. Alphabet stock jumped 3% on the news initially, before retreating to something more like a 1.2% gain as of 2:45 p.m. ET.
Time for AI investors to âwatchâ Google
Alphabet broke its big news on Google Blog, explaining that âWear OS watches, including those from Pixel, Samsung, OPPO, OnePlus and Xiaomi,â can access Gemini AI directly starting today (although the full rollout may take âweeksâ). With the touch of a button and a command prompt âHey, Google 2,â users can ask Gemini questions right on their wristwatches.
Image source: Google.
Alphabet confirms Gemini will be able to access usersâ other Google services, such as Gmail and Google Calendar, as well.
Is Alphabet stock a buy?
This is a pretty great innovation, albeit Iâm not 100% clear on how voice-controlled AI will help sell more ads and grow revenue and profit for Alphabet. It might help Alphabet sell more devices, especially Pixel smartphones, or it might not. Pixels still havenât really caught on much, and if Gemini is also available on Samsung smartwatches, this might not help Alphabetâs Pixel business much after all.
My biggest concern here is that even if Alphabet improves its competitive position in AI, putting Gemini on more Google usersâ wrists wonât necessarily offset the enormous capital investments Alphabet is sinking into AI â investments that cost the company $57.7 billion (in capital expenditures) out of the $132.6 billion (in operating cash flow) it brought in over the past year.
At a price-to-free-cash-flow ratio of more than 28, with a long-term growth rate of less than 15%, Alphabet stock still seems too expensive to buy.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Foolâs board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
