Google Crushes Microsoft's AI Monopoly

Dec. 08, 2023 9:30 AM ET Alphabet Inc. (GOOG) Stock , GOOGL Stock

Summary

• Alphabet Inc. shares gained 5.34% on December 7, 2023, driven by the launch of Gemini, a large language model for AI applications.
• Gemini, available in different versions, powers Google's generative AI chatbot, Bard, and competes with Microsoft-backed OpenAI's ChatGPT.
• Gemini's release challenges Microsoft's monopoly on AI and could drive Google's projected EPS figures higher in the medium term.
• But Google Cloud is clearly inferior to its direct competitors, which makes the whole growth picture even riskier.
• Google is a strong 'Hold' that should be part of every long-term investor's portfolio. However, given the recent rapid rally in the company’s shares, I'd not take the stock's allocation to extremely high levels.

Alphabet Inc. experienced a 5.34% increase in its shares on December 7, 2023, following the launch of Gemini, a large language model for AI applications. Gemini, available in different versions, powers Google's generative AI chatbot, Bard, and competes directly with Microsoft-backed OpenAI's ChatGPT. The article suggests that Gemini's release challenges Microsoft's previous monopoly on AI and could positively impact Google's projected earnings per share (EPS) figures in the medium term. Despite this, the author notes that Google Cloud lags behind its competitors, posing risks to the overall growth outlook. The article concludes that Google is a strong 'Hold' in investors' portfolios, but caution is advised due to the recent rapid rally in the company's shares.

Key Points:

1. Gemini's Impact: The article emphasizes the significance of Gemini, Google's large language model, and how its capabilities, including the Ultra, Pro, and Nano versions, position it as a competitor to Microsoft-backed OpenAI's ChatGPT.
2. Google's Stock Movement: Google's shares saw a notable increase following the Gemini announcement, and the author attributes this to a repricing of valuation differences between Google and Microsoft.
3. Microsoft's Monopoly Challenged: The article argues that Google's release of Gemini challenges Microsoft's perceived monopoly on AI, signaling a shift in the industry's balance of power.
4. Valuation Comparison: The author compares the valuation metrics of Google and Microsoft, highlighting Google's relatively lower price-to-earnings (P/E) ratio. However, the article notes the need for caution given Google's ambitious EPS growth expectations.
5. Google Cloud Challenges:

...

To read full story, click below