Investing.com -- Gene Munster, co-founder and Managing Partner of Deepwater Asset Management, has provided insights on Google (NASDAQ: GOOGL )’s upcoming I/O developer conference. The conference is seen as a significant opportunity for Google to demonstrate its willingness to confront the Innovator’s Dilemma and take innovative steps to remain relevant in generative AI without disrupting its established business model.

One of the main challenges for Google, similar to a year ago, is figuring out how to monetize generative AI. The company’s shares, which fell 7% in the three days following Apple (NASDAQ: AAPL ) exec Eddy Cue’s testimony, have since rebounded, increasing by 8% in the nine trading days. This bounce indicates that investor concern has lessened, but questions still linger.

The developer conference arrives at a critical point for Google, with the future of Search and its market cap hanging in the balance. The central issue is how Google’s business model will adapt in a world beyond blue links. Over the past year, AI Overviews have been introduced, which have increased Search usage. However, other AI technologies like GPT, Grok, and Claude have diverted more usage than Overviews have added, leading to a slowdown in Search growth.

As the conference approaches, the focus is on whether Google is developing anything that provides a simple, generative answer. A feature called “AI Mode” has recently started limited testing, which could be seen as a precursor to a world without blue links.

The challenge for Google is to balance providing consumers with a simple trusted answer and maintaining revenue growth and high margins for investors. The company may have more time than initially thought to manage this transition, with the possibility of short-term business model challenges leading to long-term gains. This situation is reminiscent of software companies like Autodesk (NASDAQ: ADSK ) and Adobe (NASDAQ: ADBE ) transitioning to subscription-based models two decades ago.

The keynote on Tuesday, starting at 11am ET, is expected to focus on demonstrations designed to inspire developers to build with Gemini inside Android apps. Additionally, new wearable hardware that competes with Meta’s Ray-Bans is likely to be unveiled. Updates on Project Astra, Google’s initial foray into physical AI announced in May 2024, are also anticipated.

However, for Google investors, the primary interest will be any innovative updates on Search that can build confidence in Google’s ability to navigate the challenges of generative AI.

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