Alphabet pushes deeper into AI with full Search rollout, smart glasses reveal
Published: 13:09 21 May 2025 EDT
Alphabet Inc (NASDAQ:GOOG) is accelerating its artificial intelligence strategy with the full US rollout of “AI Mode” in Google Search and the unveiling of Android-powered smart glasses.
According to analysts at Bank of America, the moves, announced at Google’s annual I/O developer conference, are a sign the company is shifting from AI integration to offense and showcase Alphabet’s confidence in its AI capabilities and the monetization potential of its large language models (LLMs), particularly the Gemini platform.
At the keynote, CEO Sundar Pichai highlighted rapid advancements in Gemini, including the Gemini 2.5 Pro model, which the company says now leads across industry benchmarks in reasoning, coding, and multimodal tasks. The model’s monthly token processing volume has jumped 50-fold year over year, Alphabet said.
The company also introduced a suite of new AI tools, including the asynchronous coding agent “Jules,” the efficiency-focused Gemini 2.5 Flash, and “Deep Think” mode for complex reasoning.
Google's full rollout of AI Mode in Search, following the success of AI Overviews in markets like the US and India, marks a strategic escalation. The Overviews have driven more than a 10% increase in query volume for eligible searches, bolstering management’s confidence in the broader release, the analysts said.
The updated search experience also includes early “agentic” functionality, allowing users to take actions such as booking events, making restaurant reservations, or scheduling appointments directly through search results. The company is partnering with Ticketmaster, StubHub, Resy, and Vagaro for initial rollouts.
Bank of America likened the development to Google’s “Reels moment” – a reference to Meta’s competitive push against TikTok – suggesting Alphabet is directly confronting OpenAI’s rising influence in consumer AI.
“Bears will argue Google has more to lose than Meta,” analysts noted, but added bulls may see a growing market that can support multiple winners, as happened in short-form video with Meta, YouTube and TikTok.
In a move that could further extend its AI ecosystem, Google also revealed Android XR-powered smart glasses with built-in Gemini integration. The glasses are equipped with cameras, microphones, speakers and optional displays, enabling contextual awareness for features like live translation, messaging, and navigation.
Bank of America noted the potential for the glasses – and a broader Android XR platform – to evolve into a next-generation computing interface, competing with similar efforts by Meta and other tech giants.
“Smart glasses could be a Trojan horse to more fully build out Google’s Android hardware line,” the analysts wrote.
Alphabet shares are up nearly 4.3% on Wednesday afternoon.
