Alphabet skyrockets as Wall Street celebrates AI model Gemini’s arrival
Alphabet Shares Soar as Gemini AI Model Takes on Microsoft’s OpenAI
December 7, 2023 – 1:44 PM PST
(Reuters) – Alphabet (GOOGL.O) shares ended 5.3% higher on Thursday as Wall Street cheered the launch of Gemini, saying the new artificial intelligence model could help narrow the gap in a race with Microsoft-backed OpenAI.
Long considered a leader in AI research, Alphabet lost the spotlight when OpenAI’s ChatGPT swept the tech landscape upon its launch in November last year and allowed Microsoft (MSFT.O) to aggressively roll out AI-powered software to businesses.
Now, Gemini looks poised to boost Alphabet’s AI heft again.
The Google parent said the much-awaited AI system was faster than OpenAI’s latest model and can process different forms of media such as video, audio and text. It comes in three versions, each designed to use a different amount of processing power.
“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,” J.P. Morgan analysts said.
The company added over $80 billion to its market value. The warm reception contrasted with the nearly $100 billion selloff in Alphabet in February after its Bard chatbot shared inaccurate information in a promotional video and a company event failed to impress.
“Gemini’s release comes at an interesting point in time when OpenAI/ChatGPT users have been complaining about how updates to the GPT model family have potentially impacted the quality of its output,” Macquarie analysts wrote in a note.
“If Google is shipping a GPT-4-beating model, this could help gather user and developer momentum behind Google.”
The company has added some of the Gemini technology to its Bard chatbot, and plans to roll out its most advanced version of Gemini through Bard early next year.
A six-minute video on the model’s abilities showed it could recognize sleight-of-hand magic tricks and help people create art by offering ideas based on materials and their color.
MICROSOFT’S AI LEAD
Alphabet has so far trailed Microsoft in the race for AI-driven cloud revenue. In the September quarter, growth at Google Cloud slowed to a near three-year low, paling before the rebound seen at Microsoft Azure.To drive sales of its AI-based offerings, Microsoft has targeted big businesses that already use its software services, while Google has turned to startups, which analysts say have curtailed spending in an uncertain economy.
Shares in both the companies have rallied around 50% this year, part of a broader AI-fueled rally in big technology stocks that has driven much of the Nasdaq’s gains.
Microsoft currently trades at 30.68 times its 12-month forward earnings estimates, compared with the Google parent’s 19.59.
“Some criticism might be that Google is late to the AI party. (But) they want to get it right and they also obviously see the huge opportunity,” said Ken Mahoney, CEO of Mahoney Asset Management in New Jersey.
“There’s 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.”
Reporting by Aditya Soni and Amruta Khanderkar in Bengaluru; Editing by Devika Syamnath
How does the versatility of Gemini AI model make it suitable for various industries?
Already started experiencing certain limitations,” said Richard Hutton, an AI researcher at Oxford University. “Gemini’s ability to process multiple forms of media gives it an edge over its competitors.”
The Gemini AI model has been praised for its versatility and efficiency. It can process large amounts of data quickly and accurately, making it ideal for a wide range of applications. From analyzing videos and extracting key information to transcribing audio and generating written content, Gemini offers a comprehensive solution for businesses and researchers alike.
Furthermore, Gemini’s different versions cater to diverse computing needs. The three variations of the AI model are designed to utilize various levels of processing power, allowing users to choose the option that best suits their requirements. This flexibility ensures that Gemini can be deployed on a range of devices, from powerful servers to edge computing devices.
One of the key advantages of Gemini over OpenAI’s ChatGPT is its enhanced capabilities in processing different forms of media. While ChatGPT primarily focuses on text-based inputs and outputs, Gemini is able to handle not only text but also video and audio. This makes Gemini a more comprehensive and versatile tool for industries such as media, entertainment, and advertising.
The launch of Gemini couldn’t have come at a better time for Alphabet. After OpenAI’s breakthrough with ChatGPT, Alphabet had found itself playing catch-up in the AI race. Businesses and organizations were increasingly turning to OpenAI for AI-powered solutions, leaving Alphabet at a disadvantage.
However, with the introduction of Gemini, Alphabet has taken a significant step towards regaining its position as a leader in the AI field. The positive response from investors, as evidenced by the rise in Alphabet shares, reflects the market’s confidence in the potential of Gemini.
Analysts at J.P. Morgan highlighted the importance of Gemini in addressing investor concerns regarding the high costs associated with running generative AI models. Gemini’s different model sizes offer a more cost-effective solution, making AI innovation more accessible for businesses and researchers.
While the release of Gemini has certainly bolstered Alphabet’s AI capabilities, it is clear that the competition in this field is fierce. Microsoft’s OpenAI remains a formidable opponent, and both companies will continue to push the boundaries of AI research and development.
As AI continues to advance and shape various industries, it is crucial for companies like Alphabet and Microsoft to constantly innovate and improve their AI models. The launch of Gemini signifies Alphabet’s commitment to staying at the forefront of AI technology and its determination to reclaim its position in the AI race.
Only time will tell how Gemini and OpenAI’s ChatGPT will fare in the ever-evolving landscape of artificial intelligence. But for now, Alphabet can bask in the success of Gemini’s launch and the renewed optimism it has brought to investors and industry observers alike.
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