---
title: "Google I/O Preview: Is Gemini 4.0 Coming? But That’s Not the Most Important Thing"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/286348511.md"
description: "Citigroup states that, given the roughly three-to-four-month release cycle, it is more likely to see Gemini 3.2 or 3.5 at I/O. While Gemini 4.0 is possible, its probability is relatively lower. The key lies in whether AI capabilities can be translated into real revenue. Citigroup maintains a 12-Month Price Target of $447. Cloud business backlog nearly doubled quarter-over-quarter to $462 billion. The AI Max advertising tool has ended its beta test, and agentic shopping is connecting the complete chain from search to checkout"
datetime: "2026-05-14T03:30:28.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/286348511.md)
  - [en](https://longbridge.com/en/news/286348511.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/286348511.md)
---

# Google I/O Preview: Is Gemini 4.0 Coming? But That’s Not the Most Important Thing

The biggest suspense at Google I/O is not whether Gemini 4.0 will make an appearance, but whether Google can prove that Gemini is translating model capabilities into revenue growth for its search, advertising, shopping, and cloud businesses.

**Google has two key events in the coming week: Google I/O on May 19 will focus on products and models, while Google Marketing Live on May 21 will point more directly to advertising and commercialization.** Market attention is shifting from “what models are being released” to “how AI capabilities are entering daily business processes.”

According to Zhuifeng Trading Desk, Ronald Josey of Citigroup Research pointed out in a research report on May 12 that Gemini models remain at the forefront, AI tools are driving global query growth, UCP is transforming commerce, and Google Cloud’s backlog has nearly doubled quarter-over-quarter to $462 billion. Citigroup maintains a “Buy” rating for Alphabet with a 12-Month Price Target of $447.

This means that any model updates at I/O are merely the first layer of signals. What truly affects valuation **is whether AI search can expand commercial queries, whether AI Max can become the new default tool for advertising budgets, whether agentic shopping can connect the transaction chain, and whether the cloud business can continue to benefit from Gemini, TPU, and enterprise AI demand.**

## Gemini 4.0 Is Possible, But Not the Only Focus

Judging by the release pace, Gemini 4.0 is not impossible. Over the past two years, Google has sequentially launched Gemini 1.0 Pro, 1.5 Pro, 2.0 Flash, 2.5 Pro, 3 Pro, and 3.1 Pro, with Gemini 3.1 Pro released in February 2026. **Given the roughly three-to-four-month cycle, it is more likely to see Gemini 3.2 or 3.5 at I/O. Gemini 4.0 is also possible, but the probability is relatively lower.**

For investors, the model number itself is not the decisive factor. More important is whether the Gemini ecosystem continues to expand, including Genie 3, Gemma 4, Gemini Robotics ER-1.6, and the path for Gemini to enter more core services after Gmail and Maps.

Google may also update Gemini Health, Android XR smart glasses, and travel scenario integrations around services like Google Canvas. If these products can form a unified entry point, they will strengthen Gemini’s role as an operating layer, rather than just a chat or generation tool.

As of the end of the first quarter of 2026, Google’s product suite had reached 350 million subscribers. The next thing to observe is whether Gemini feature expansion will drive subscription revenue or serve more for advertising monetization. If AI search improves experience but weakens ad impressions, the market reaction may be limited; if it enables more queries to have commercial intent, the growth space for the advertising business will be reassessed.

## The Key to AI Search Is Turning Queries into Targetable Intent

Search remains the core of Google’s valuation. The change most worth watching at I/O is how AI-O, AI-M, and the Gemini search experience converge, and where Chrome stands in this framework.

Google management mentioned during the first-quarter earnings call that longer, more complex queries from AI-O, AI-M, and Gemini provide more intent-based data. This point is directly related to advertising value. Users are no longer just entering short keywords but are inputting budgets, scenarios, preferences, and constraints, thereby giving Google finer-grained demand signals.

**Traditionally, about 20% of queries have commercial attributes. If AI search turns more queries into identifiable, matchable, and targetable commercial intent, the ceiling for search advertising may rise.** For advertisers, the question is not whether AI features are advanced, but whether they can bring more conversions at the same CPA (Cost Per Acquisition).

In the first quarter, Google’s query volume hit a record high. In April 2026, Google’s global search share was 90.0%, an increase of 10 basis points quarter-over-quarter. Chrome’s global share was 68.0%, an increase of 130 basis points quarter-over-quarter. If these entry points continue to expand, the commercial foundation of AI search will become more solid.

## Google Marketing Live Will Test AI Advertising Monetization

If Google I/O answers “where AI capabilities stand,” Google Marketing Live answers “how AI makes money.”

Currently, AI-driven advertising campaigns account for more than 30% of search advertising spending, covering tools such as AI Max, P-Max, and Demand Generation. Advertisers can create and modify campaigns using prompts, Ads Advisor provides agentic assistance, Smart Bidding Exploration brings about 27% more conversions in search campaigns, Campaign Total Budgets reduce manual budget adjustments by about 66%, and Journey Aware Bidding is still in the testing phase.

AI Max will be the most critical observation point at GML. This tool ended its beta test in April 2026 and is planned to completely replace Dynamic Search Ads by September 2026. Early results show that the full feature set of AI Max brings 14% more conversions; through broader search term matching, it brings 7% more conversions at a similar CPA.

Google is also advancing vertical optimizations such as AI Max for Shopping and Search Campaigns for Travel. If these tools become the new default configuration for search budgets, the impact of AI on the advertising business will shift from “feature upgrades” to “restructuring of the delivery system.”

## Agentic Shopping Targets the Transaction Closed Loop

Google’s shopping business is extending from a product discovery entry point to a deeper transaction chain. UCP, Direct Offers, Agentic Checkout, and the agentic shopping experience in Google Shopping and Chrome will be common observation points for both I/O and GML.

**This change is not simply about adding shopping buttons, but about reducing friction from search, comparison, selection, to checkout.** Google recently expanded its partners to include several large e-commerce companies, as well as Meta, Microsoft, and Stripe, later adding Klarna and Affirm. If payments, installments, checkout, and ad delivery can be integrated, Google Shopping’s commercial role will become heavier.

Chrome is also more important in this context. In April 2026, Chrome’s global share was 68.0%, and its US share was 50.0%. If agentic shopping, personalized recommendations, and checkout processes are embedded in Chrome, Google will gain a new commercial entry point beyond search.

This is also one of the reasons investors are paying attention to I/O. If Gemini can advance from “search answers” to “executing actions,” Google’s pricing power in shopping and advertising may strengthen.

## Cloud Business and TPUs Are Increasing Alphabet’s Valuation Weight

Alphabet’s past valuation core was search advertising, but Google Cloud is becoming a more important variable.

**In the first quarter, Google Cloud revenue was $20.028 billion, a year-on-year increase of 63.4%; backlog reached $462.3 billion, nearly doubling quarter-over-quarter and increasing by 400.3% year-on-year. During the same period, token consumption increased by 60% quarter-over-quarter. These indicators show that enterprise AI demand is entering the cloud business’s orders and usage volume.**

Calculations show that Google Cloud revenue is expected to increase from $58.705 billion in 2025 to $94.529 billion in 2026, then to $146.521 billion in 2027 and $209.525 billion in 2028. The corresponding growth rates are 61.0% in 2026, 55.0% in 2027, and 43.0% in 2028. The proportion of cloud business in total revenue is also expected to rise from 14.6% in 2025 to 19.5% in 2026, reaching 30.6% in 2028.

Profit margins are also improving. Google Cloud’s operating margin was 23.7% in 2025, expected to rise to 33.8% in 2026, 35.0% in 2027, and 35.5% in 2028. This means the cloud business is no longer just a high-growth segment but is beginning to support Alphabet’s overall profit margin.

At I/O, Gemini Code Assist, the “vibe coding” tools in Google AI Studio, and TPU sales strategies are also worth watching. TPU-related revenue is expected to start contributing in the second half of 2026 and significantly amplify in 2027. For the market, this represents Google Cloud forming a more complete chain between models, chips, infrastructure, and enterprise AI tools.

## YouTube and AI Creative Tools Provide Another Growth Line

The YouTube Brandcast on May 13 is an outpost before I/O and GML. Observation points include YouTube engagement, Shorts growth, Demand Gen tool updates, and subscription adoption after the price hike for YouTube Premium/Music in April 2026.

The advertising creative side is also being redone by AI. Gemini Omni is positioned for end-to-end creative orchestration, with both generation and editing potentially integrated into the advertising process. Lyria 3 has already generated over 150 million songs. Demand Gen ads with video enhancement bring 16% higher conversions.

**The commercial significance of these tools lies in reducing the cost of ad production and iteration. In the past, advertisers needed to handle materials, delivery, budgets, and bidding separately; now Google is attempting to put these links into the same automated system. As long as conversion rate improvements continue, the motivation for advertisers to migrate to AI delivery processes will strengthen.**

## Valuation Bet: Can AI Support Higher Multiples

Citigroup’s 12-Month Price Target of $447 is based on approximately 30 times the 2027 GAAP EPS of $14.75. Based on the closing price of $387.35 on May 12, the expected stock return is 15.4%, plus a dividend yield of 0.2%, resulting in a total expected return of 15.6%.

**Alphabet is currently trading at approximately 26 times its 2027 GAAP EPS. A 30x valuation is higher than the market average and also higher than Google’s own historical valuation range. For this premium to hold, two conditions must be met simultaneously: search queries continue to grow, and AI does not weaken the advertising base; Google Cloud continues to accelerate under Gemini demand, TPU demand, and enterprise AI adoption.**

Revenue models show that Alphabet’s total revenue is expected to increase from $402.836 billion in 2025 to $484.620 billion in 2026, a year-on-year increase of 20.3%; $579.560 billion in 2027, a year-on-year increase of 19.6%; and $684.904 billion in 2028, a year-on-year increase of 18.2%. Google Search and Other revenue is expected to be $260.170 billion in 2026, a year-on-year increase of 15.9%; total advertising revenue is expected to be $333.057 billion in 2026, a year-on-year increase of 13.0%.

Risks are also clear. Advertising budgets may be dragged down by the economy and consumer spending, AI competition may impact Google more than expected, internet advertising spending may slow down faster, and antitrust, data, and privacy regulations may still suppress valuation.

Therefore, whether Gemini 4.0 is released will attract attention, but it is not the only answer. The two upcoming launches truly need to test whether the AI features demonstrated by Google can become growth engines for search, advertising, shopping, and cloud businesses.

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