The stock price of Google's parent company Alphabet closed up 5.3% sharply on Thursday, as Wall Street celebrated the launch of its AI model Gemini and believed that this so-called "largest and strongest" AI model in Google's history would help narrow or even completely erase the gap between it and Microsoft's supported OpenAI.
For a long time, Google has been regarded as a leading enterprise in the field of artificial intelligence research. But in November last year, OpenAI's ChatGPT swept the entire tech industry and allowed Microsoft to take the lead in the AIGC field with its massive investment, while Google appeared to be overshadowed.
But now, this powerful model called Gemini is Google's latest attempt to showcase its AI capabilities.
Google announced on Wednesday that it will provide customers with a series of Gemini based AI programs. Google claims that the model can handle various media from audio to video, which is an important development as users use chatbots to meet a wider range of needs.
This search engine giant will also use these algorithms to support its own product, Bard, which competes with ChatGPT, as well as mobile phone features that can run without network connectivity.
Google stated that in a series of tests conducted according to industry standards, the most powerful Gemini Ultra version outperformed OpenAI's GPT-4 technology. After testing a specific group of customers, this version is expected to be widely available to software developers early next year.
This series of grand blueprints has driven Google's market value to surge by over $80 billion in just one day on Thursday, almost equivalent to the valuation of the currently unlisted OpenAI - which is widely believed to be between $80 billion and $90 billion.
Undoubtedly, the current warm welcome of Gemini's release in the market is in stark contrast to the release of Google Bard chatbots in February this year. At that time, Google shared inaccurate information in promotional videos and caused nearly $100 billion in market value to evaporate after the company's promotional activities failed to leave a deep impression.
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This year, Google's stock price has risen by over 50%, significantly outperforming the Nasdaq Composite Index, but falling behind some technology peers, including Microsoft, the largest investor in OpenAI.
OpenAI released GPT-4 in March this year, which was previously widely considered the most powerful AI system on the market. Large companies such as Morgan Stanley and Salesforce have used it to build chatbot applications. A paid subscription version of ChatGPT is driven by GPT-4 and has a monthly fee of $20.
By contrast, according to Similarweb's data, Bard's global monthly traffic is about 220 million, far behind ChatGPT's user base, with the latter's monthly traffic almost eight times that of Bard. OpenAI has also developed a mobile ChatGPT application, and Google has not yet taken this step.
In the revenue competition of cloud computing driven by artificial intelligence, Google has also been lagging behind Microsoft so far. In the quarter ending in September this year, the growth rate of Google Cloud slowed to its lowest point in nearly three years, which pales in comparison to the continuously rising growth rate of Microsoft Azure.
In order to drive sales of artificial intelligence based products, Microsoft had previously targeted large enterprises that already use its software services, while Google turned to startups. But analysts say that what is unfavorable for Google is that in the face of economic uncertainty, startups have been cutting back on expenses.
However, with the release of Gemini now, Google may have the potential to gradually reverse those unfavorable situations. Morgan Stanley analysts said, "Google is starting to address investors' concerns about generative artificial intelligence innovation and high operating costs of GenAI models by combining different versions of Gemini models."
In a report, Macquarie analysts wrote, "Gemini's release comes at an interesting moment as OpenAI users have been complaining that updates to the GPT model may affect its output quality. If Google launches a model that can defeat the GPT-4, it will help to rally user and developer support for Google."
Two weeks ago, OpenAI just reappointed Ultraman as CEO and appointed new board members, barely bringing an end to a turbulent period for this startup company. This infighting incident prompted some clients to start evaluating other AI providers.
From the perspective of P/E ratio, Microsoft's current stock price is about 30.68 times Wall Street's expected average earnings for the next 12 months, while Google's parent company Alphabet's forward P/E ratio is 19.59 times. From this perspective, Google's stock price seems to have more upward potential.
"Some people may criticize Google for coming too late in the field of artificial intelligence. But they want to do it well, and they clearly see huge opportunities," said Ken Mahoney, CEO of Mahoney Asset Management.
Mahoney pointed out, "There are different ways for companies to develop, but one of the best ways is to provide them with more solutions or products based on the same customer base. I believe Gemini is what Google is currently doing."