Alphabet is planning to roll out ads on its AI chatbot, Gemini, in 2026, causing shares to drop over 2%. With more than 650 million monthly users, this move could significantly boost Alphabet’s distribution if done right. Subscriptions may not be the best monetization strategy, as most users are unwilling to pay $20 per month for AI tools.

Despite OpenAI deprioritizing ads, Alphabet is focusing on monetization. The firm’s average revenue per user for Google Search is $44, showing potential for ads to be a lucrative strategy. By offering both ad-supported and ad-free tiers, Alphabet aims to maximize revenue and user engagement with GenAI chatbots.

Alphabet’s expertise in advertising is expected to drive Gemini’s return on ad spending higher, making it appealing to advertisers seeking GenAI traffic. With a fair value estimate of $340, Alphabet’s potential for growth lies in effectively launching ads and expanding its user base while providing advertisers with a high return on investment.

Read more at Morningstar: Alphabet: Reports Indicate That Company Is Considering Ads Within Gemini in 2026