Alphabet gains $131 billion in market value after it unveils AI ambitions at I/O conference

• Alphabet stock surged as much as 9% since it made several AI announcements at its I/O conference on Wednesday.
• The company unveiled "AI Snapshot" for Google Search and said it's incorporating generative AI capabilities across its product suite.
• "With generative AI we are taking the next step... we are reimagining all our core products, including search," CEO Sundar Pichai said.

Alphabet stock surged 4% on Wednesday and another 5% on Thursday after the company made several artificial intelligence announcements at its I/O developer conference.

The two-day rally has added $131 billion to Alphabet's market value and helped reignite excitement for the company's foray into AI. The stock is now trading at its highest level since August 2022. 

The positive reaction this week was the opposite of what happened to Alphabet stock after its initial AI announcement a few months ago when it unveiled "Bard," a competitor to ChatGPT. The stock fell 9% in a single day after one of Bard's responses during a demo was inaccurate. 

"With generative AI we are taking the next step. With a bold and responsible approach, we are reimagining all our core products, including search," Alphabet CEO Sundar Pichai said at Wednesday's conference.

The company announced "AI Snapshot," which integrates generative AI results directly on top of Google's search results. Microsoft's Bing Search has taken a similar approach, in which search query results show both an AI section as well as traditional search results on the same page.

Alphabet also announced a new large language model, called PaLM 2, which is powering 25 new products and features that the company is rolling out. The new model can write code and currently supports more than 100 languages. 

Other product announcements from Alphabet included an image search feature to identify AI-generated images, AI-related updates to Google Maps, a foldable Pixel phone, and a new smart watch operating system, among other products.

Wall Street reacted favorably to Alphabet's conference, with Bank of America saying in a Thursday note: "Overall, Google's presentation was a big improvement from the disappointing press event in February with a strong framework for AI chatbot integration into search."

"We thought Google's I/O presentation helped address three primary AI related search concerns: product, cost and monetization," BofA said.