Google shares bounce on Gemini 2.0 launch

(Image credit: VCG / Contributor via Getty Images)

published 12 December 2024

Shares in Google’s parent company Alphabet (NASDAQ:GOOGL) jumped 5.5% on Wednesday (11 December), hitting a new all-time high in the process, as the company announced the launch of Gemini 2.0, its latest family of artificial intelligence (AI) large language models (LLMs).

AI has been one of the most pressing concerns for big tech companies over the last two years, ever since the launch of ChatGPT brought generative AI into the public consciousness and sparked a feeding frenzy for stocks like Nvidia (NASDAQ:NVDA) and its ‘Magnificent Seven’ associates, including Alphabet.

The launch marks Google’s entry into what it calls “the agentic era” of AI. These models, it says, “can understand more about the world around you, think multiple steps ahead, and take action on your behalf, with your supervision”.

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The new family of products “promises to be faster and smarter” says Matt Britzman, senior equity analyst at Hargreaves Lansdown. “Alphabet sees these models as a step toward the next chapter in language models where they handle tasks on your behalf, with highlights like better multitasking, complex reasoning, and tool use.”

What can you use Google Gemini 2.0 for?

Gemini 2.0 is a family of LLMs, the complex machine learning programs that underpin AI applications. So, different Google products will utilise the latest generation of Gemini in different ways. The AI overviews that are often returned in Google searches will, for example, hopefully become more relevant and useful, once the latest LLMs are incorporated.

The advanced capabilities, though, potentially point towards entirely new use cases. For example, Google promises a new feature called Deep Research, which it says “uses advanced reasoning and long context capabilities to act as a research assistant, exploring complex topics and compiling reports on your behalf”. Subscribers to the premium tier, Gemini Advanced, already have access, according to Google’s release.

Software developers, meanwhile, will get a new product, Jules, Google’s AI assistant for developing code. Jules, according to Google, works directly within a GitHub workflow and can, under the supervision of the developer, identify code problems, before developing and executing a plan to address them.

Is now a good time to buy Google shares?

Now could be a good time to buy Google’s shares, as the latest release appears to make up ground for the business that commentators had felt it had lost to its rivals.

“While it’s still early days for this tech, investors liked what they saw from a name that’s sometimes seen as being behind in the AI race,” says Britzman.

Another tailwind for Google’s share price coincided with Gemini’s release, in the form of US inflation data that showed a small increase, in line with prior expectations, to 2.7% during November.

The announcement on Wednesday paves the way for expected rates cuts next year, which will likely be beneficial for high growth tech stocks like Alphabet.

“The Nasdaq index yesterday smashed through the 20,000 barrier for the first time,” says Dan Coatsworth, investment analyst at AJ Bell. “In hitting this latest milestone, the Nasdaq has nearly doubled in two years.

“To put that into context, the FTSE All-Share is up around 11% over the same timeframe.”

Recently, Alphabet has been plagued by the threat of a breaking up of Google – which the US courts ruled in August is effectively a monopoly – into smaller chunks. This had been weighing on its share price; in the six months to 6 December, the stock had fallen 1.1%.

Donald Trump’s election win could potentially change that, though. Reuters reported in November that experts believe Trump will change course on the antitrust measures that threaten the breakup, and potentially intervene in the regulators’ decision-making.

All in all, there is lots to be positive about for Google. Share price gains of 12% over the last week reflect market optimism, and now could be a good time to buy Google shares.

Investing in Google means buying shares in Alphabet, the parent company. Alternatively, an investment trust or ETF that holds the stock could be another means of gaining exposure. For example, the SPDR MSCI World Communication Services UCITS ETF (LON:WTEL) has an 18.6% weighting towards Alphabet at time of writing.

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Dan is a financial journalist who, prior to joining MoneyWeek, spent five years writing for OPTO, an investment magazine focused on growth and technology stocks, ETFs and thematic investing.

Before becoming a writer, Dan spent six years working in talent acquisition in the tech sector, including for credit scoring start-up ClearScore where he first developed an interest in personal finance.

Dan studied Social Anthropology and Management at Sidney Sussex College and the Judge Business School, Cambridge University. Outside finance, he also enjoys travel writing, and has edited two published travel books.