Google's Free AI Video Tool Boosts Micron's Memory Demand
Google has rolled out a significant update to its AI video creation tool, Vids, making it free for all Google and Workspace users as of September 23. The upgrade leverages Gemini Omni 1.1 Flash, enabling high-definition video generation with customizable clip lengths and seamless scene transitions. Targeted at small businesses and marketers, the tool offers templates for users without editing experience, and all videos include a hidden SynthID watermark. This move follows an April update that first introduced AI video to free accounts and is part of Google's broader strategy to monetize AI across Search, Cloud, and advertising.
The free AI video tool is expected to drive long-term revenue for Alphabet Inc. (NASDAQ:GOOGL) by encouraging users to upgrade to paid plans, retain businesses within the Workspace ecosystem, and increase ad revenue on YouTube. Despite a 4% drop in Alphabet shares on the announcement day, likely due to a broader tech selloff, institutional interest in the stock has grown, with hedge funds increasing their holdings from 265 to 275 and from $72.4 billion to $93.7 billion between Q1 and Q2 2026.
One of the quiet beneficiaries of Google's AI video push is Micron Technology Inc. (NASDAQ:MU). AI video generation is computationally intensive, driving demand for high-bandwidth memory, a key product of Micron. The company's forward P/E of 7x suggests Wall Street does not expect the current boom to last, with earnings projected to grow 128% in fiscal 2027 before declining sharply in subsequent years. However, Micron's financial flexibility, with $38.36 billion in cash and $5.07 billion in short-term investments, positions it well to benefit from sustained AI tool usage.
Hedge funds have also increased their bets on Micron, with the number of funds holding the stock rising from 154 to 184 and the value of their holdings more than doubling from $14.3 billion to $34.9 billion. This suggests confidence in a longer memory cycle, potentially supported by the widespread adoption of consumer AI tools like Vids.