Alphabet's (GOOGL.O) stock closed 5.3% higher on Thursday as Wall Street praised the introduction of Gemini,
citing the potential for the new AI model to close the gap with Microsoft-backed OpenAI.
Long regarded as a pioneer in AI research, Alphabet lost prominence when OpenAI's ChatGPT, which was released in November of last year, swept the tech world and enabled Microsoft (MSFT.O) to rapidly introduce AI-powered software to commercial clients.
Gemini now appears ready to increase Alphabet's AI power once more.
"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," analysts at J.P. Morgan stated.
The company's market value increased by more than $80 billion. The positive response was in contrast to Alphabet's nearly $100 billion stock selloff in February, which occurred after the company's Bard chatbot misrepresented facts in a promotional video and a poorly attended event.
"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," analysts at Macquarie wrote in a note.
"If Google is shipping a GPT-4-beating model, this could help gather user and developer momentum behind
Google."
The business has integrated some Gemini technology into its Bard chatbot and intends to release the most sophisticated Gemini through Bard in the first part of 2019.
A six-minute video showcasing the model's capabilities revealed that it could identify magic tricks performed with deception and provide inspiration for artists by matching colours and materials.
The AI leader at Microsoft
As of now, Microsoft leads Alphabet in the competition for AI-driven cloud revenue. Growth at Google Cloud
reached a nearly three-year low in the September quarter, fading before Microsoft Azure's recovery.
While Google has turned to startups, which analysts claim have cut spending in an uncertain economy, Microsoft has targeted large businesses that already use its software services to drive sales of its AI-based offerings.
Both companies' shares have increased by roughly 50% this year, contributing to a larger AI-driven surge in large technology stocks that has accounted for the majority of the Nasdaq's gains.Currently, Microsoft is trading at 30.68 times its projected 12-month earnings, while the parent company of Google is trading at 19.59 times.
"Google's tardiness in joining the AI party may be a point of contention. "They clearly recognise the enormous opportunity and want to get it right," stated 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."
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