What happened

Shares of Alphabet (GOOG 0.82%) popped more than 10% this week, according to data from S&P Global Market Intelligence. The parent company of Google, YouTube, and Google Cloud rose after its annual product event called Google I/O, where executives announced dozens of product updates and new artificial intelligence (AI) features. As of 12:17 p.m. ET on Friday, shares of Alphabet are up 11.1% this week.

So what

Investors had soured on Alphabet earlier this year when Microsoft decided to team up with OpenAI and bring its innovative conversational AI tool called ChatGPT to the Bing search engine. Google has dominated the search engine market for years, with this segment bringing in most of its operating profits, so any new threat to this business likely made investors nervous.

Alphabet has tried to assuage investor concerns by releasing its own conversational AI tool called Google Bard. At the Google I/O event, the company fully released the service to the majority of countries worldwide and made numerous AI updates to its services including Google Drive, Google Photos, and Google Translate. Investors likely saw this as a positive development in the battle with Microsoft. 

There were other product announcements at the event that possibly made investors bullish. These include updates to the Android Auto software (which Alphabet estimates will be in 200 million cars by the end of the year), making Google Search more interactive by including things like YouTube videos in search results, and three new hardware devices for the Pixel product line.

The Pixel products are interesting because they make Google's business vertically integrated and will reduce the acquisition costs it has to pay other hardware providers like Apple to get people to use Google Search. For reference, Alphabet reportedly pays Apple $20 billion annually to make Google Search the default search engine on its devices.

The growth of Pixel hardware will be exciting to watch, with device sales reportedly up over 200% in North America. However, the company still only holds a 2% share of the smartphone market. If this can bump up to 5% to 10% over the next few years, it will not only boost Alphabet's overall sales but also reduce the fees it pays to other hardware makers like Apple, Samsung, and LG.

Now what

After slipping to start the year, Alphabet shares are now up 32% year to date and are actually up more than Microsoft in that time span. It has been a surprisingly bumpy ride to start the year, with headlines seemingly coming out every day about all these new AI products and whether they will disrupt Google Search.

If you are an investor in Alphabet, it is probably best to just tune out the noise and let this blue chip stock do its thing over the long term.