Alphabet’s shares surged by 5.3% on Thursday as Wall Street responded positively to the launch of Gemini, a new artificial intelligence (AI) model. Analysts believe Gemini could help Alphabet narrow the gap in the competitive AI landscape, where Microsoft-backed OpenAI had gained significant attention with ChatGPT.
Once considered a leader in AI research, Alphabet faced challenges when OpenAI’s ChatGPT dominated the tech scene last year, enabling Microsoft to aggressively introduce AI-powered software for businesses. Now, with the introduction of Gemini, Alphabet aims to reclaim its position as a frontrunner in AI innovation.
According to Alphabet, Gemini surpasses OpenAI’s latest model in terms of speed and can process various forms of media, including video, audio, and text. The AI system comes in three versions, each optimized for different processing power levels.
J.P. Morgan analysts noted that Gemini addresses investor concerns about generative AI innovation and the high costs associated with running advanced AI models. The positive reception led to an increase of over $80 billion in Alphabet’s market value.
Gemini’s release is strategic, as OpenAI/ChatGPT users had raised concerns about potential declines in output quality with updates to the GPT model family. If Gemini proves to outperform GPT-4, it could attract significant user and developer support for Google.
Alphabet plans to integrate some of Gemini’s technology into its Bard chatbot, with the most advanced version set to roll out through Bard early next year. A demonstration video showcased Gemini’s capabilities, including recognizing sleight-of-hand magic tricks and assisting in art creation based on materials and colors.
While Microsoft has led the AI-driven cloud revenue race, Alphabet aims to strengthen its position with Gemini. Google Cloud’s growth had slowed in the September quarter, and Alphabet faces competition in attracting big businesses already using Microsoft’s software services. The AI-fueled rally has driven shares in both companies, with Microsoft trading at a higher forward earnings multiple compared to Alphabet.
Analysts note that while some criticize Google for being late to the AI party, the launch of Gemini reflects the company’s commitment to getting it right and seizing the significant opportunities in the AI space. Gemini’s introduction is seen as a move to provide more solutions and offerings to the existing customer base, signaling Alphabet’s determination to thrive in the evolving AI landscape.
