TL;DR:
- Alphabet’s shares rose 5.3% with the launch of Gemini, a new AI model.
- Gemini aims to compete with Microsoft-backed OpenAI and offers faster processing across various media forms.
- Market analysts view Gemini positively, addressing concerns about generative AI innovation.
- Despite earlier setbacks, Alphabet’s market value gained over $80 billion with Gemini’s introduction.
- Gemini integration into Bard chatbot and plans for further rollouts indicate Alphabet’s commitment to AI.
- Alphabet seeks to catch up with Microsoft in the AI-driven cloud revenue race.
- Both Alphabet and Microsoft have experienced significant share price increases driven by AI technology.
- Gemini’s arrival signifies Alphabet’s determination to expand its solutions and offerings.
Main AI News:
Gemini, Alphabet’s latest artificial intelligence model, has sent shockwaves through the tech world, and Wall Street is taking notice. The excitement surrounding Gemini’s launch has driven Alphabet’s shares up by an impressive 5.3% in a single day. This development has left industry experts and investors eagerly anticipating whether Gemini can help Alphabet regain its leadership position in the fiercely competitive AI race, where Microsoft-backed OpenAI has taken the lead.
Alphabet, long regarded as a trailblazer in AI research, momentarily lost its edge when OpenAI’s ChatGPT took center stage following its November launch last year. This shift allowed Microsoft to aggressively roll out AI-powered software solutions for businesses, overshadowing Alphabet’s efforts. However, with the arrival of Gemini, Alphabet seems poised to reestablish its dominance in the AI landscape.
What makes Gemini truly remarkable is its impressive speed, surpassing even OpenAI’s latest model. Moreover, Gemini boasts the capability to seamlessly process various forms of media, including video, audio, and text. This versatility is further emphasized by the model’s availability in three distinct versions, each tailored to meet specific processing power requirements.
J.P. Morgan analysts have lauded Alphabet’s strategic move, stating, “Google is beginning to address investor concerns around generative AI innovation and the high cost of running GenAI models through the combination of Gemini’s different model sizes.” This positive response has translated into a substantial increase in Alphabet’s market value, adding over $80 billion.
This warm reception stands in stark contrast to the nearly $100 billion selloff that Alphabet experienced in February. The setback was triggered when its Bard chatbot shared inaccurate information in a promotional video, and a company event failed to impress.
Gemini’s launch coincides with a pivotal moment in the OpenAI/ChatGPT community, as users have raised concerns about the quality of recent updates to the GPT model family. Macquarie analysts noted, “If Google is shipping a GPT-4-beating model, this could help gather user and developer momentum behind Google.”
Alphabet has already integrated some of Gemini’s technology into its Bard chatbot and plans to unveil the most advanced Gemini version through Bard early next year. A six-minute video showcasing the model’s capabilities demonstrated its prowess in recognizing sleight-of-hand magic tricks and assisting users in creating art by offering creative suggestions based on materials and color choices.
While Alphabet’s strides with Gemini are impressive, it still lags behind Microsoft in the race for AI-driven cloud revenue. In the September quarter, growth at Google Cloud slowed to a nearly three-year low, while Microsoft Azure witnessed a remarkable rebound. Microsoft’s strategy has focused on targeting large enterprises already using its software services, whereas Google has turned to startups, a move that analysts believe has been hindered by reduced spending in an uncertain economic environment.
Both companies have seen their shares surge by approximately 50% this year, driven by the broader AI-driven rally in big technology stocks, which has fueled much of the Nasdaq’s gains. Microsoft currently trades at 30.68 times its 12-month forward earnings estimates, compared to Alphabet’s 19.59.
Despite criticism of Google’s perceived late entry into the AI arena, Ken Mahoney, CEO of Mahoney Asset Management in New Jersey, remains optimistic. He stated, “They want to get it right, and they also obviously see the huge opportunity. There are different ways to grow your company, but one of the best ways is with the same customer base by giving them more solutions or more offerings, and that’s what I believe this (Gemini) does for Google.”
Conclusion:
The successful launch of Alphabet’s Gemini AI model signifies a significant move by Alphabet to re-establish itself as a key player in the competitive AI market. The positive market response and Gemini’s capabilities position Alphabet to challenge Microsoft-backed OpenAI and potentially regain lost ground. This development highlights Alphabet’s commitment to AI innovation and its ongoing efforts to diversify its offerings in a rapidly evolving market.
