By Adam Clark

Google-parent Alphabet unveiled a flurry of artificial-intelligence features at its developers conference. While analysts were impressed, the stock market still seems worried about how AI might eat into the company's core search market.

The headline announcements on Tuesday included the introduction of "AI mode" to Google's search engine for U.S. users and a premium AI subscription. That came alongside many features such as 3-D video calls, real-time language translation and digital assistants, as well as a new line of smart glasses.

Alphabet shares were up 0.3% at $164.54 in premarket trading after falling 1.5% the previous day. However, Wall Street analysts said the event showcased the company's strength in AI development.

The conference "reoriented investors back to first principles, i.e., AI success requires a combination of engineering, infrastructure, and distribution, and Alphabet is well positioned across these areas," wrote KeyBanc analyst Justin Patterson in a research note Wednesday.

Patterson has an Overweight rating and $195 target price on Alphabet stock.

Google said its "AI Overviews" feature has 1.5 billion monthly users and the evidence is that users shown such summaries subsequently use its search engine more frequently.

"We believe these enhancements will resonate with users and attract advertisers through higher quality leads and improved monetization potential," wrote CFRA Research analyst Angelo Zino.

That could help calm some fears about declining usage, triggered earlier this month when an Apple executive testified in a Department of Justice lawsuit against Google that searches in the iPhone maker's browsers fell for the first time in April.

"Google is about to go through a tricky time as doubters call into question its search business, and there is a possibility that its shares get hit hard if the numbers wobble before getting back on track," wrote independent analyst Richard Windsor. "This would represent a great opportunity in Google for anyone brave enough to take the other side of the permanently skittish market."

Write to Adam Clark at adam.clark@barrons.com

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May 21, 2025 07:09 ET (11:09 GMT)

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