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UBS estimates Google could add $2.2 billion in revenue next year under the its base case for pricing of the Duet AI tool. (Photo by Leon Neal/Getty Images)
The fact that
Microsoft
is going to charge a premium price to use the artificial-intelligence features of its workplace software sent its stock to a record high. Google could score by releasing an equivalent that would undercut its rival, according to analysts at UBS.
UBS’s
Lloyd Walmsley suggested in a research note that
Alphabet
‘s (ticker: GOOG) Google could price Duet AI—a tool to be used with its Workspace productivity suite––at $9.47 a month per user. That would be far below the $30 monthly cost
Microsoft
(MSFT) detailed on Tuesday for its 365 Copilot software.
“We view this as a business area where GOOG has an offensive generative AI position,” Walmsley wrote.
Unlike in search, where Alphabet faces the risk that the integration of AI could cannibalizing its existing, dominant product, Google can hope to gain market share in productivity tools. Google has started taking preorders for Duet AI from its existing Workspace customers, but it isn’t clear when the product will be released.
Walmsley calculates that if 15% of Google’s existing customers use Duet AI, that could result in $2.2 billion of incremental revenue in 2024. But he noted that Google’s Workspace user base comprises both smaller businesses and more price-sensitive customers than Microsoft’s, limiting the company’s ability to charge premium prices.
“The offensive opportunity in Workspace – while a modest positive – does not change our Neutral view on shares given a higher exposure to potential monetization headwinds in the core search business,” Walmsley wrote.
UBS has a Neutral rating on Alphabet stock with a target of $132 for the price. Alphabet shares were down 0.2% at $121.77 early on Thursday.
Write to Adam Clark at [email protected]
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