Shares of Alphabet (GOOGL) declined on Tuesday following a series of artificial intelligence announcements at the Google I/O conference for developers. Investors appeared cautious despite the event showcasing advancements in AI, as concerns remain over how these developments will affect Google’s core search advertising business amid rising competition.

Alphabet’s stock had already fallen about 12% in 2025 prior to the conference. On the day of the event, shares dropped another 1.5%, closing near $164. The timing of Google I/O coincided with Microsoft’s Build conference in Seattle, where Microsoft shares also dipped slightly to close around $458.

One of the most notable announcements from Google was the launch of a new premium AI subscription service aimed at business customers, priced at $249.99 per month. This new offering, powered by the Gemini 2.5 AI model, is positioned roughly $50 above OpenAI’s top-tier product. The Gemini 2.5 models served as the backbone for the majority of updates presented during the event, and Google revealed that its Gemini app has reached 400 million monthly active users.

A major update to the search experience came in the form of “AI Mode,” a generative AI feature now available in the U.S. Unlike traditional search, AI Mode provides chatbot-style conversational answers and is an evolution of the AI Overviews feature, which offers summaries instead of direct web links. Google said AI Mode utilizes its latest models and real-time datasets, delivering more personalized and context-rich results. It also allows users to revert to traditional search if they prefer, largely because the AI-powered responses require significantly more computing power.