Artificial intelligence (AI) is advancing at breakneck speed. Cutting-edge technologies threaten to disrupt large industries and create entirely new ones.
alphabet (Google 3.78%) (GOOG 3.76%) and microsoft (MSFT 2.55%) Knowing this, they are fighting for AI supremacy. Pass the loot to the winners and their shareholders.
ChatGPT mania takes root
Microsoft made headlines in late January when it announced a multi-billion dollar investment in OpenAI, creators of the wildly popular AI-powered application ChatGPT. OpenAI is the leader in generative AI, using algorithms to create content such as text, images, and audio.
OpenAI created ChatGPT to allow users to interact conversationally with AI models. The technology caught on like wildfire. People use it to write books, software code, and even music. Since ChatGPT launched in November, he has already amassed over 100 million users, making him the fastest growing app of all time.
Microsoft is moving quickly to integrate OpenAI technology into its products and services. Microsoft Teams uses OpenAI’s models to automatically generate meeting notes, transcripts, and recommended tasks. The company’s latest Windows operating software makes using AI features like ChatGPT fast and easy. Microsoft is also reportedly planning to add AI capabilities to his popular suite of Office productivity tools.
But investors are even more excited about Microsoft’s plans to transform the Internet search market with a new, AI-powered version of the Bing search engine. By rolling out the next generation of his OpenAI model, which is even more powerful than ChatGPT, Microsoft hopes to provide better and more complete answers to user questions in a convenient chat-like experience. I am aiming for The mission of the new Bing is clear. It’s about stealing market share from the current search king, Google.
Alphabet stumbling block
Alphabet has long understood the power of AI as a potential growth driver and a worrying threat to search dominance. CEO Sundar Pichai began transforming the tech giant into an “AI-first company” in 2017. Since then, Google has invested heavily in his AI and is widely believed to have some of the best technology in this rapidly expanding field.
But after several high-profile setbacks, Pichai has opted to take a more cautious approach to the company’s AI strategy. Google executives were concerned about the reputational risk the search giant could take if they deployed AI tools before they could be trusted to be accurate. This has allowed startups like OpenAI to enter the market first.
But after ChatGPT went viral, Pichai had to take action. He decided to debut his AI chatbot Bard on Google in early February. However, Bard’s ads showed chatbots providing the wrong answers to user queries. Investors took the mistake as a sign that Google’s AI wasn’t ready for the big time, and rushed to sell Alphabet shares. Technology conglomerates will lose over $100 billion in market value.
Which stock should I buy today?
Some analysts believe that the drop in Alphabet’s market cap is an overreaction by short-term traders. But some see investors as acknowledging that Google faces a credible threat to its search dominance for the first time in over a decade, and that the combination of Microsoft and OpenAI should not be taken lightly. There is also
The $200 billion global search market is at stake, and Alphabet still derives most of its profits from it. Meanwhile, according to StatCounter, which analyzes web traffic, Microsoft’s share of this industry is much smaller, around 3% compared to Google’s more than 93%, but it will use the power of AI to become even more of a company. We aim to Great search power. The risks in this fight are therefore biased. Nearly everything is good for Microsoft and almost everything is bad for Google.
So investors looking to limit their risk while retaining the ability to profit from AI’s amazing potential can be better served by buying Microsoft stock today.
Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Joe Tenebruso has no positions in any of the mentioned stocks. The Motley Fool invests in and recommends Alphabet and Microsoft. The Motley Fool’s U.S. headquarters has a disclosure policy.
