Alphabet Drops 2% After I/O AI Overhaul and Gemini Hits 900M Users

At the annual developer conference, CEO Sundar Pichai introduced the largest Search box redesign in 25 years, shifting results toward AI-driven interactive experiences and follow-up conversations. New offerings include Gmail Live, Docs Live, Gemini Spark, Google Flow and agent integrations across Google apps, signaling an aggressive push to embed AI across the consumer ecosystem.

Gemini’s monthly active user base has more than doubled over the past year, reaching 900 million, underscoring rapid adoption of AI-native search and conversational features. Pichai noted that AI summaries now appear atop 2.5 billion Search queries and that AI Mode usage has doubled each quarter, highlighting deepening user engagement.

Alphabet shares fell just over 2% on the day, as investors weighed concerns around potential user confusion from overlapping AI tools and unclear pricing for premium features. Market watchers highlighted the need for clearer monetization paths to ensure that complex AI queries generate more advertising revenue than traditional search links.

Alphabet formed a partnership with Blackstone to launch a TPU-based cloud infrastructure company, expanding its AI chip offerings beyond GPUs and strengthening its enterprise cloud appeal. Meanwhile, Bank of America reiterated a Buy rating with a $430 target, citing Google’s strong product innovation and ecosystem lock-in, but still questioning the pace at which AI queries will translate into incremental revenue.