Despite the flop of Alphabet’s AI event, Google dominates search for now

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Alphabet (GOOGL) on Wednesday unveiled new features on its AI-enabled search and map products, just a day after Microsoft (MSFT) rolled out a similar strategy for its search engine. While Microsoft’s new AI capabilities could take market share away from Alphabet, Google is still the unshakeable leader in search. In a livestream event from Paris on Wednesday, Alphabet showed how its products use artificial intelligence to make its search engine more “natural and intuitive” for users. At the event, Alphabet offered a demo of Bard, the company’s experimental new conversational AI service powered by Google’s Language Model for Dialogue Applications, or LaMDA, which launched earlier this week. Bard Google’s answer to the viral sensation OpenAI, ChatGPT provides high-quality responses to user queries from information on the web. Alphabet said Bard will be open to the public in the coming weeks, but for now it’s being tested by a select few users for feedback. Alphabet also showed AI-enabled features to Google Maps and Google Lens, allowing users to search for images from their phone’s camera. This event came on the heels of Club holding Microsoft’s announcement of AI-powered updates to its search engine, Bing, that will generate more in-depth answers to user questions. Microsoft has a major stake in OpenAI and hosts ChatGPT on its Azure cloud. Analysts say Microsoft’s AI aspirations could be a huge disruption to Google’s core search business. “Google was blindsided,” Evercore ISI analyst Mark Mahaney said in an interview with CNBC Wednesday. Alphabet, which has worked on the development of artificial intelligence for many years, eventually “was beaten to market by Microsoft,” he said. Shares of Alphabet fell 8%, reflecting investor disappointment with Bard and Google’s AI demo. To make matters worse, there have been reports of Bard offering the incorrect description in a promotional video. GOOGL MSFT 1Y mountain Alphabet vs. Microsoft 1-year performance Microsoft’s new features are expected to pose a threat to Google, currently the market share leader in search and where nearly all of its revenues and profits come from. Considering Alphabet’s total revenue of $76.05 billion during the fourth quarter, about 57% came from Google Search and more. But data from Statcounter shows that Google accounts for 93% of the search engine market share across all platforms, including desktop, tablet and mobile, overshadowing Bing’s 3% market share. Jefferies analyst Brent Thill told CNBC, “Google doesn’t have much to worry about.” He added, “I don’t think it’s going to make a dent in Google’s business. Getting people to switch from Google to Bing is going to be difficult.” The reason, he said, is that Bing’s search experience still doesn’t measure up to Google. At the same time, Thill said that Microsoft will capture one point of market share, which is equivalent to $2 billion in revenue. “There’s an opportunity over time to have another growth driver,” he said of Microsoft. Thill said he would be a buyer of Alphabet here, something we disagree with right now at the Club. We’re also concerned about the government’s antitrust lawsuit over Google’s online advertising practices. Conclusion It seems that Alphabet was caught off guard by Microsoft’s recent announcement on artificial intelligence and decided to increase the timeline on the release of its products based on artificial intelligence. Alphabet, whose Google services segment includes search, makes a huge amount of money from online ads. As shareholders in the technology stock, we wouldn’t want your research business to be harmed. But since Google has been researching AI for a long time, it probably has more AI projects in the pipeline that can compete with the industry. We understand why Alphabet’s stock has declined. Any risk to market share, even if it’s a few percentage points, poses challenges. In an economy where advertising budgets have shrunk, changes in spending may become more apparent. But Google Search, the platform of choice for users, still has an edge with advertisers over Microsoft’s Bing. However, this new research battle won’t be over anytime soon, so we’ll be monitoring it. Taking a broader view of the AI ​​arms race, the clear winner is chipmaker and Club holding Nvidia (NVDA), which provides the backbone powering AI technologies. (Jim Cramer’s Charitable Trust is along GOOGL, MSFT, and NVDA. See here for a full stock list.) “As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes later sending a trade alert before buying or selling a stock in his charitable foundation’s portfolio. 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Alphabet (GOOGL) on Wednesday unveiled new features on its AI-enabled search and map products, just one day after Microsoft (MSFT) rolled out a similar strategy for its search engine. While Microsoft’s new AI capabilities could take market share away from Alphabet, Google is still the unshakeable leader in search.

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