Alphabet Outstrips Microsoft, OpenAI to Claim Top Spot in Fierce AI Dominance Race

by | Jan 1, 2024

Alphabet, the parent company of Google, has made an impressive comeback in the race for AI dominance, leaving investors amazed by its recent advancements. While Microsoft and OpenAI initially seemed to be in the lead earlier in 2023, Alphabet has shown that it is far from being left behind.

The driving force behind Alphabet’s resurgence is the groundbreaking Gemini Ultra AI model. This revolutionary creation has surpassed human experts in the MMLU test, establishing itself as a game-changer in the field of artificial intelligence. The success of Gemini has given Alphabet’s Google Cloud a significant boost, enhancing its prospects in the highly competitive cloud computing market.

Alphabet’s investment in Gemini has surged to an impressive $1.9 billion, solidifying the company’s commitment to AI innovation. This investment has proven to be highly profitable, especially for investor Bill Ackman, who ranks among the world’s most successful investors. Ackman sees Alphabet as one of his top AI stock picks, recognizing its potential for long-term growth.

However, Alphabet’s triumph goes beyond its AI ventures. Advertising on Google Search, YouTube, and other platforms accounted for nearly 78% of the company’s total revenue in Q3 2023. This robust advertising business has propelled Alphabet’s stock, which experienced a remarkable surge of almost 60% in 2023.

Despite a temporary setback that caused Alphabet’s stock to drop by 17% at one point, Ackman believes the sell-off was an overreaction. He remains optimistic about Alphabet’s prospects, highlighting the company’s many competitive advantages and its position as a dominant player in the AI realm for the foreseeable future.

Alphabet’s AI prowess has even caught the attention of Suzanne Frey, an executive at the company and a member of The Motley Fool’s board of directors. Frey’s involvement further emphasizes Alphabet’s commitment to staying ahead in this rapidly evolving field.

With Ackman’s Pershing Square hedge fund holding over 4.4 million Class A shares and nearly 9.4 million Class C shares of Alphabet as of September 30, 2023, his confidence in Alphabet’s future is clear. Ackman’s investment strategy has paid off handsomely, with his net worth standing at approximately $4 billion.

The fact that Alphabet is Ackman’s favorite AI stock speaks volumes about its potential. Among Pershing Square’s portfolio, which includes only eight stocks in total, Alphabet is second only to Chipotle Mexican Grill in terms of holdings. With solid financials and a promising outlook, Alphabet is an obvious choice for investors in 2024.

Looking ahead, the improving U.S. economy presents a positive outlook for Alphabet’s advertising business. As the economy continues to recover, businesses are expected to increase their marketing budgets, bringing significant benefits to Alphabet’s revenue streams.

Alphabet’s Gemini Ultra AI model has already surpassed the current state-of-the-art AI model in 30 out of 32 widely used benchmarks. This technological edge, combined with Alphabet’s aggressive investment in AI, positions the company for continued success in the rapidly expanding AI market.

While Microsoft and OpenAI may have initially stolen the spotlight in the race for AI dominance, Alphabet has quickly caught up and is now leading the charge. With its competitive advantages, impressive financial performance, and groundbreaking AI models, Alphabet is poised to dominate the AI landscape for years to come.

In this ever-evolving industry, the battle for AI dominance continues, but Alphabet’s recent achievements have undoubtedly placed it at the forefront of the race. As investors navigate the tech landscape, Alphabet stands as a compelling choice, offering the potential for significant returns and a front-row seat to the future of AI. The excitement is tangible as Alphabet continues to redefine what is possible in the world of artificial intelligence.