The battle for AI dominance has reached new heights as Microsoft-backed OpenAI launched ChatGPT, amassing an impressive user base of 100 million within two months. In response, Alphabet introduced Bard, a generative AI chatbot, but faced initial setbacks. However, Alphabet is now making significant strides in the AI arms race, raising the question of whether it is a better bet than Microsoft.
Alphabet’s Defense with AI: Reinforcing Its Fort
Alphabet is deploying AI across its various offerings, incorporating generative AI features like “Help Me Write” in Gmail and enhancing applications like photos, maps, and Google Workspace. The company’s most significant move is integrating generative AI into its core product, Google Search. Despite a tepid performance in its search segment, Google’s dominance with an 85% market share and the potential for next-generation search engines’ growth make Alphabet a formidable contender.
The Growth Potential of Google Workspace
Google’s suite of productivity applications holds a significant share of the office productivity software market. With the demand for cloud-based productivity software projected to reach $128 billion in 2030, Alphabet’s addition of AI to Google Workspace could position it as a major revenue driver.
Microsoft’s First-Mover Advantage
With OpenAI’s ChatGPT, Microsoft secured an early foothold in the fast-growing generative AI space. Microsoft’s stake in OpenAI and the widespread deployment of ChatGPT’s algorithms in various applications give the company an advantageous position. Despite Alphabet’s progress, Microsoft’s revenue and earnings potential from ChatGPT, as estimated by Credit Suisse, is significant.
The Uncertain Outcome of the AI Race
Determining the ultimate winner in the AI race between Microsoft and Alphabet remains premature. Both companies have their respective strengths and limitations. While Microsoft made an early move, Alphabet has the opportunity to catch up by enhancing its Bard chatbot. Additionally, the projected $16 trillion revenue of the AI market by the end of the decade suggests that there is ample space for both companies to thrive.
Investment Considerations
Given their specific strengths, both Microsoft and Alphabet are potential top AI stocks in the long run. Investors can carefully evaluate their strategies and prospects, considering the rapid growth and revenue potential of the AI market.