After being caught off guard on the artificial intelligence (AI) chatbot front just a few short years ago, Alphabet (GOOG +6.42%) (GOOGL +6.36%) and its Gemini chatbot have steadily caught up with OpenAI's ChatGPT.
Alphabet released Gemini 3 this month. The company claims it offers "PhD-level reasoning" for various tasks, providing context about what you're trying to learn. It's also less prone to "flattery" than its rival.
But will it be enough to keep Alphabet at the forefront of AI chatbots? Here's how Gemini 3 is taking on the competition, and how Alphabet is succeeding in the AI space, even if it doesn't overtake OpenAI.
Image source: Getty Images.
What's new under the hood for Gemini 3
Gemini 3 builds on the success of its predecessors and comes just eight months after Gemini 2.5 was released. Alphabet highlighted several of its capabilities in a blog post, claiming that it outperforms all frontier AI models on major benchmarks and features a new "Deep Think" mode that can solve complex problems with "PhD-level" depth.
In practical terms, the company states that Gemini 3 can function more like an agent to complete multi-step tasks, such as booking a local service or organizing your email. The company even said that you could give Gemini 3 a recording of yourself playing pickleball, and it could suggest training on how to improve your game. Alphabet CEO Sundar Pichai said in a statement: "It's state-of-the-art in reasoning, built to grasp depth and nuance -- whether it's perceiving the subtle clues in a creative idea, or peeling apart the overlapping layers of a difficult problem."
The company says its new version of the chatbot will be "[S]mart, concise and direct, trading cliché and flattery for genuine insight -- telling you what you need to hear, not just what you want to hear." This seemed like a clear jab at ChatGPT, which is known to "flatter" its users.
Alphabet also said that Gemini 3 is the company's most powerful vibe coding model yet. This makes it easier than ever for developers to tell the model what they want, producing the code with better visualization and interactivity than before.
Alphabet is doing more than enough to compete in AI
The latest version of Gemini 3 is no doubt a formidable competitor to ChatGPT. While there were some early concerns that OpenAI's chatbot would render services like Google Search obsolete -- and it's certainly a threat -- Alphabet's Gemini has alleviated some of those fears.
Gemini has 650 million monthly active users, and Alphabet says that its AI Overview -- its artificial intelligence responses in Google Search -- has more than 2 billion monthly users. The company states that 70% of Google Cloud customers utilize its AI.
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Key Data Points
Alphabet charges for the most advanced version of its chatbot, both for individuals and enterprise accounts. Most of the company's AI services are reported under the Google Cloud segment, which reported strong growth of 34% in the third quarter to $15.1 billion, beating analysts' consensus estimate of $14.7 billion.
Alphabet's advertising revenue jumped 12.6% to $74.1 billion, proving that -- at least for now -- the company can grow ad sales even in the wake of expanding chatbot usage.
ChatGPT has 700 million weekly users, so Gemini has a long way to go before it catches up. Whether Gemini 3 overtakes ChatGPT may not ultimately matter. All of the above shows that Alphabet is successful in executing on its AI strategy and is growing its cloud revenue and ad sales as it does so. And with Alphabet implementing Gemini 3 into its latest Search tools and coding platform, the company can lock more people in to its ecosystem.
Even better, Alphabet's stock has a price-to-earnings ratio of just 28 right now. That's cheaper than the S&P 500's average of 31,which makes Alphabet one of the few successful, profitable AI companies with a relatively cheap share price. It's no wonder that Warren Buffett's Berkshire Hathaway recently bought $4 billion of this AI stock.
