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Alphabet’s Gemini Sparks Investor Enthusiasm, Shares Surge 5.3%

Alphabet Inc., the parent company of Google, witnessed a remarkable surge in its shares, closing 5.3% higher on Thursday. The cause of the optimism was the launch of Gemini, Alphabet’s latest artificial intelligence (AI) model. Investors and analysts on Wall Street expressed confidence that Gemini could potentially bridge the gap in the ongoing AI race, especially against Microsoft-backed OpenAI.

Once hailed as a leader in AI research, Alphabet faced a shift in attention when OpenAI’s ChatGPT gained prominence in the tech landscape last November. This shift allowed Microsoft to aggressively introduce AI-powered software to businesses, leaving Alphabet in the shadows. However, the arrival of Gemini is now seen as a strategic move to reclaim Alphabet’s position in the AI arena.

Gemini, Alphabet’s much-anticipated AI system, boasts faster processing capabilities compared to OpenAI’s latest model. It demonstrates versatility by efficiently handling various forms of media, including video, audio, and text. The system comes in three versions, each optimized for different levels of processing power.

J.P. Morgan analysts noted that Gemini’s release addresses investor concerns about the innovation in generative AI and the high costs associated with running such models. The positive response from the market resulted in Alphabet adding over $80 billion to its market value, marking a significant rebound from a nearly $100 billion selloff in February.

Gemini’s timing is noteworthy, coinciding with user complaints about the impact of updates to the ChatGPT model family. Analysts from Macquarie suggested that if Gemini indeed surpasses GPT-4, it could attract users and developers to rally behind Google.

Alphabet has already incorporated some of Gemini’s technology into its Bard chatbot and plans to introduce the most advanced version of Gemini through Bard early next year. A demonstration video showcased Gemini’s capabilities, revealing its proficiency in recognizing magic tricks and assisting in art creation based on materials and colors.

Despite Alphabet’s trailing position in the AI-driven cloud revenue race compared to Microsoft, Gemini has instilled renewed confidence. Microsoft has targeted large businesses for its AI-based offerings, while Alphabet has focused on startups. The surge in Alphabet’s shares reflects a broader trend of AI-fueled rallies in major technology stocks, contributing to the gains in the Nasdaq.

While some critics argue that Alphabet is late to the AI party, others believe that the company’s meticulous approach and the potential presented by Gemini demonstrate a commitment to getting it right. Ken Mahoney, CEO of Mahoney Asset Management, highlighted the significance of offering more solutions and offerings to the existing customer base as a key growth strategy for Google.

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