Bank of America analysts suggest that the future growth of Google's Gemini AI may rely more on its user interface design than the raw intelligence of its underlying model. A recent report argues that by adopting a visual, feed-based layout similar to popular social media apps, Google could significantly increase user engagement and open new revenue streams that are not yet fully priced into Alphabet's stock.
Key Takeaways
- Bank of America maintains a Buy rating on Alphabet with a $252 price target, citing a novel growth driver for its Gemini AI.
- The core thesis is that shifting Gemini to a visual, scrollable feed could boost user engagement and monetization.
- This strategy moves away from a simple chatbot to an experience more like TikTok or Instagram Reels.
- Increased time spent on the app could create new opportunities for advertising and premium features.
- The broader market for visual and generative AI is expanding rapidly, with major platforms integrating video creation tools.
Bank of America Highlights a New AI Strategy
While much of the conversation around Alphabet in 2025 has centered on the increasing capabilities of its Gemini AI, a new analysis from Bank of America shifts the focus. Analyst Justin Post suggests that the next major value driver for Google's parent company might not come from a smarter AI, but from a redesigned user experience.
In a note to clients, Post maintained a Buy rating on Alphabet (GOOGL) stock with a $252 price target. However, his reasoning diverges from the common narrative. Instead of focusing on model performance, he points to a strategic change in how users interact with Gemini.
The report argues that Google is evolving Gemini from a static chat interface into a dynamic, visual feed. This change is designed to appeal to modern user habits, particularly on mobile devices where scrolling through content is second nature.
"A more visual and feed-based layout may drive higher engagement, especially for mobile users used to scrolling formats," Post wrote in the report.
This UI-driven growth strategy leverages Google's existing strengths in user engagement, learned from its experience with properties like YouTube. The idea is that changing the look of the application can fundamentally change the results, leading to more time spent within the Gemini ecosystem.
Leveraging Google's Massive Distribution
A key advantage for Google is its unparalleled distribution network. With billions of users across Android, Chrome, and Gmail, the company can introduce a new interface at a scale that few competitors can match. If this new feed-based Gemini is integrated into these platforms, engagement and revenue could scale rapidly.
However, the report also notes potential risks. Shifting user habits from a direct question-and-answer format to a discovery-based feed could be challenging. There is also a risk of losing ground to competitors like ChatGPT if the core chat functionality is perceived as secondary.
A Look at Other Analyst Ratings
Bank of America is not the only firm with a positive outlook on Alphabet, though their reasoning differs. Other recent analyst calls include:
- HSBC: Maintained a Buy rating with a Street-high price target of $285, citing optimism for Gemini and the integration of Google's custom "Ironwood" chip.
- TD Cowen: Issued a Buy rating and increased its price target from $270 to $280, pointing to strong performance in Search and continued momentum in Google Cloud.
- Wells Fargo: Raised its price target from $187 to $236 but maintained an Equal-Weight rating, expressing caution about medium-term uncertainty despite recent strength in Search.
Monetization Through a Visual Feed
The strategic shift toward a visual interface is fundamentally about creating new monetization opportunities. A scrollable feed provides a natural environment for various revenue-generating elements that are difficult to integrate into a simple chatbot.
By increasing the time users spend on the app, Google can introduce more surfaces for advertising. A vertical layout also creates space for promoting premium features or offering paid content. This model transforms Gemini from a utility tool into a content discovery platform, similar to social media feeds.
Generative AI Market Projections
The market for generative AI is experiencing explosive growth. Analysts project that sales in the sector could reach $71 billion in 2025. By 2032, some estimates place the market size as high as $890 billion, underscoring the immense financial opportunity for companies that can successfully monetize AI services.
This approach aligns with Google's core business model, which is heavily reliant on advertising revenue. The company's experience with YouTube Shorts, which now monetizes at a rate comparable to its traditional long-form video content per watch hour in the U.S., provides a successful template for this strategy.
The Broader Trend of Visual AI
Google's potential pivot with Gemini is part of a larger industry trend where visual AI is becoming a primary driver of growth. Generative video and image tools are no longer niche products but are being integrated directly into the largest consumer platforms.
For instance, OpenAI's video generation app, Sora, recently became the most downloaded application on Apple's U.S. App Store, indicating mainstream consumer interest in AI-native video. Similarly, TikTok, a platform built entirely around a visual feed, is projected to capture a significant portion of the U.S. social media advertising market this year, with over 200 million users in Europe alone.
Integrating Creation Tools
Technology companies are actively embedding generative AI tools into their existing products to simplify content creation. This strategy aims to lower the barrier for users to produce high-quality content, thereby increasing overall platform engagement.
Examples of this integration are becoming common:
- Google is incorporating its Veo 3 video model into YouTube Shorts, allowing for prompt-based clip creation directly on mobile devices.
- The company's on-device AI tools, known internally as "Nano Banana," are designed to bring video and image generation capabilities to Android and Chrome.
- Other platforms have seen massive adoption. According to reports, tools like Adobe Firefly have been used to generate over 22 billion assets, and Canva users created nearly 1.4 billion AI images in the last year.
By transforming Gemini into a visual-first platform, Google is positioning itself to capitalize on this powerful trend. The success of this strategy will depend on whether the company can effectively retrain user behavior and seamlessly integrate monetization without alienating its vast user base.
