Alphabet Inc. should give every household in America a free Google Home Mini smart speaker, a Morgan Stanley analyst suggested Thursday.

The speakers currently retail for $49 each, which would mean spending about $3.3 billion. Morgan Stanley analyst Brian Nowak wrote Thursday that would be a “small price to pay” for Google-parent Alphabet GOOGL, +1.20% GOOG, +1.28% . He estimated that the company could compensate for that cost about five times over through the operating profits it generates more generally from retail search over the next five years.

Nowak worries that Google is losing ground to Amazon.com Inc. AMZN, +1.21% when it comes to retail search queries, given that more purchases are being made through voice commands and Amazon is widely thought to have a lead on Google in terms of smart-speaker penetration. He projects that roughly 70% of households will have speakers by 2022, and that Amazon will have 1.3 times more speakers in homes than Google will at that point, absent any dramatic action.

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Morgan Stanley projects that Alphabet will bring in $44 billion in retail-search revenue through 2022, or nearly $16 billion in operating profit.



Amazon has recently gotten into voice-controlled TVs, and Nowak thinks that more screen-oriented options could “accelerate voice commerce.” Only a small portion of those who use voice assistants employ them for shopping.

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“With this backdrop, we argue Google needs more devices/smart speakers in people’s homes,” Nowak wrote.

Granted, the mere presence of smart speakers doesn’t mean that people will start shopping with them. Many are perfectly fine shopping on their phones, or they want the voice-search experience to improve, Nowak warned. What’s more, Google might already be too late to the game given strong Prime penetration in the U.S.

“Those households could be less likely to adopt using a Google Home...even if it were free,” he said. Nowak has an overweight rating on Alphabet’s stock, and he raised his price target Thursday to $1,250 from $1,200.

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Google shares are up 16% over the past 12 months, while the S&P 500 SPX, +0.67% has risen 11%.