Artificial intelligence (AI) isn't new to those in the tech industry or to investors. But now it has exploded on Main Street as well, thanks to the introduction of the chatbot dubbed ChatGPT.
This bot is pretty impressive with its ability to answer complex problems, generate essays or articles, and even write songs or humorous speeches (rest easy, best men and bridesmaids everywhere). Microsoft's (MSFT -1.84%) billion-dollar investment proves its legitimacy.
But it isn't a finished product, as it relies on historical data and isn't updated in real time. As investors, we definitely know the value of up-to-date data. Alphabet's (GOOG 0.37%) (GOOGL 0.35%) Google Search isn't as flashy, but it has long relied on AI to optimize results.
Alphabet has been using AI for years
Here are some of the ways Alphabet company deploys AI:
- Search results that dig deep into web content to find text, the ability to search by text and picture (take a picture of a part you need, and add text "where to buy near me" and voilà), and other features.
- Google Maps, which constantly updates for traffic and displays speed limits.
- Customers' ability to search their photo library by the content of the photo.
- Gmail, Pixel, Google Cloud, and YouTube all employing AI.
- Perhaps most importantly for investors, Google Ads using AI to generate effective ad campaigns for Alphabet's customers.
Google Search is still a force
Google Search is the lifeblood of Alphabet. It provides over half of the company's annual revenue, as shown below.
Data source: Alphabet. Chart by author.
Because of this, Alphabet can ill afford to give significant ground to Microsoft Bing. Luckily for Alphabet's investors, Microsoft hasn't shown the ability to hedge into Alphabet's dominance, as shown below.
Data source: Statista.
Remember, investors: This is about advertising dollars. Microsoft drawing a few curious eyeballs for a short period probably won't cause advertisers to suddenly shift significant ad dollars away from Google Search.
Finally, Alphabet is auditioning its generative chatbot dubbed Bard, which has been in the works for years. This all adds up to a company that is ready to roll when it comes to AI.
The introduction of ChatGPT and buzz around Microsoft may motivate Alphabet to push new features and bring to market some solutions that it has been investing in for a long time. And that could be just the ticket for Alphabet investors.
