Can Alphabet's Gemini AI Catapult Google Ahead in Tech Race?

Google parent Alphabet Inc GOOG GOOGL experienced a significant boost in market value, adding $87 billion in a single day, following a demonstration of its Gemini large language model. 

This AI model, comparable to OpenAI's ChatGPT, highlighted the importance of a strong AI strategy for investor confidence. 

To maintain these gains, Alphabet must demonstrate how its AI expertise will translate into increased sales, Bloomberg reports.

Gene Munster, a managing partner at Deepwater Asset Management, emphasized the critical role of AI in Alphabet's business model, particularly in enhancing Google's usage and protecting its search business. 

However, Alphabet has faced challenges throughout the year, with concerns of lagging behind Microsoft Corp MSFT in the AI race. 

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Microsoft has been actively integrating OpenAI's ChatGPT into its products, contributing to Azure's growth, while Google Cloud's results have been less impressive.

Despite these challenges, Alphabet's recent showcase of Gemini Pro for businesses, allowing the development of applications using the AI model, has reassured some that the company remains a key player in AI. 

This development has led to a shift in investor perceptions, recognizing Alphabet's long-term investments and extensive data resources in AI.

While Microsoft's revenue will likely grow slightly faster than Alphabet's in the coming years, Alphabet's stock trades at a lower earnings multiple, indicating growth potential. 

Chris Mack, a global equity portfolio manager, notes that Microsoft currently has an edge due to better communication and product execution. 

Still, Alphabet's focus on AI with the Gemini launch signals its commitment to maintaining a competitive position in the technology sector.

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Price Actions: GOOG shares traded lower by 0.11% at $133.80 on the last check Thursday.