By Senad Karaahmetovic
The artificial intelligence (AI) war is heating up with investors seeking to increase exposure to AI-focused stocks.
Alphabet (NASDAQ:GOOGL) yesterday presented Bard, its own AI service that should compete with ultra-popular ChatGPT, developed by Microsoft-backed (NASDAQ:MSFT) OpenAI. Google is also integrating AI capabilities in Search to help digest complex information into easy formats. Bard is based on LaMDA - Google’s in-house Transformer-based neural language model.
Bank of America analysts expect that AI-based products will help Google to generate additional revenues, in the form of subscriptions, data fees, and advertising. The company’s AI day is scheduled for Wednesday, a day after Microsoft hosts a press event to likely discuss ChatGPT integration into Bing.
“The AI race is clearly on for the tech sector, with multiple new competitive AI products launching and search integration in a short period of time post-ChatGPT’s launch on 11/30/22. Speed may be important for scale as the models are learning models,” analysts wrote in a client note.
“Per industry experts, Google’s language models are highly capable, Google may have more data to access than ChatGPT, Google has extensive computing infrastructure to build on and, of course, Google search has a large distribution advantage with iOS and Android. While a new wave of AI competition has arrived, we think Google is well prepared with years of investment in the technology.”
Given the all-in AI race that is developing in recent years, analysts also expect to see “significant government interest in the technology,” which they say is justified.
Analysts covering the semiconductor space for Bank of America added that Meta Platforms (NASDAQ:META) is also likely to grow its AI capacity.
"Despite near-term inventory buildup at cloud (per INTC/AMD), we anticipate continued AI investments to be medium-/long-term tailwinds for cloud semis vendors," they wrote in a separate note.
China-based Baidu (HK:9888) also saw its shares soar today after the internet company said it’s close to completing tests of an AI project similar to ChatGPT and Bard.