Alphabet unveiled a series of AI features at its developer conference which impressed Wall Street but the stock reaction was muted.

No company can match Google’s ability to get artificial intelligence in front of the masses. That’s not always enough.

The California-based company began testing AI Mode in March of this year. Google's latest AI search tool builds on AI Overviews, which was introduced in the U.S. in May 2024 and has 1.5 billion users, according to an article on the Google website.

The search giant currently trades at a price-to-earnings ratio ( P/E) of just 18.5, which is close to a 30% discount from the S&P 500 's P/E of 25.9. That discount comes as Alphabet's growth remains solid. In its first-quarter earnings report, revenue rose 12% to $90.2 billion, with operating income jumping 20% to $30.6 billion.

Google on Tuesday unleashed another wave of artificial intelligence technology to accelerate a year-old makeover of its search engine that is changing the way people get information and curtailing the flow of internet traffic to websites.

Alphabet Inc.’s investors are looking to this week’s developer conference to see if the company can reset the narrative amid fears that its long-standing market dominance is on shaky ground.

Alphabet stock was sliding Tuesday afternoon as the Google I/O keynote announcements initially seemed to underwhelm investors. Alphabet shares dropped as the company shared AI news, with several of the AI updates announced scheduled to come in the weeks and months ahead.

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Google's parent company plans to invest hugely, primarily in AI and cloud infrastructure, reports Old Mutual Wealth research analyst Nadine Chetty-Khan.

The Google owner is underperforming the Nasdaq Composite, which has rallied in recent weeks and is only down about 1% year to date at the time of writing. This is one of the largest and most profitable companies in the world,

In view of this, Google is well-positioned in the AI race. Google is a strong contender due to its huge infrastructure, accumulated information, network of Data Centers, and due to huge investments. Google possesses a unique combination of these resources concentrated in one place.

Shares of Alphabet ( GOOG 4.61%) ( GOOGL 4.69%) have finally come to life on Wednesday after the company's I/O presentation yesterday. Alphabet announced numerous new AI products and advances that show Google is leading in artificial intelligence (AI), not falling behind.