Proactive Investors - Alphabet (NASDAQ:GOOGL) Inc (NASDAQ:GOOG), the parent company of search engine titan Google, is repositioning its artillery for the year ahead following what Bank of America (NYSE:BAC) dubbed an “AI wake-up call” in 2023.
Chief among America’s third-largest corporation’s arsenal is the development of its suite of ChatGPT-killing (wishfully speaking) Gemini large-language models (LLMs).
Alphabet rushed to commercialise its AI technology after OpenAI’s groundbreaking ChatGPT LLM turned the technology sector on its head in 2023.
Although the Google parent faces a potentially insurmountable task in besting Microsoft-backed OpenAI’s first-mover advantage, BoA analysts still touted Gemini’s revenue-generating potential.
Analysts highlighted the dual potential of AI integration into Google's search engine, which promises enhanced user experiences, new use cases and new monetization avenues through targeted advertising and Performance Max adoption.
Yet the company also faces a slew of risks, including the potential devaluation of its search engine due to the proliferation of AI across various platforms, increased competition in direct response advertising, concerns over capital allocation, and the persistent bugbear of antitrust litigation.
Alphabet’s European Union antitrust bill alone stands at more than €8 billion ($8.7 billion) under the bloc’s hawkish approach to anti-competitive practices.
Google Play, the corporation’s market-leading mobile app store, faces a perpetual onslaught of lawsuits against it, causing a degree of uncertainty to its future cash flows.
Nonetheless, these risks have yet to cause much of a discount factor on Alphabet shares.
Following more than 50% worth of gains throughout 2023, Alphabet cheered a new all-time high of $151.50 this Wednesday, bringing the firm’s market capitalisation to $1.88 trillion.