Since ChatGPT launched three years ago, many tech experts have suggested that Google was falling behind in the AI race. Recent developments, however, tell a different story.
Google has been on a roll lately. It unveiled new AI technology and forged partnerships, like its recent collaboration with Anthropic PBC, which reassured investors that it could compete with OpenAI and others. The latest model, Gemini 3, has garnered praise for its strong performance in reasoning and coding, even excelling where other AI chatbots struggle. Google’s cloud business is thriving, driven by the AI boom and increased demand for computing power.
There’s noticeable interest in Google’s AI chips. These chips are becoming a compelling alternative to Nvidia’s leading technology. A recent report indicated that Meta Platforms Inc. is considering using Google’s chips, causing Alphabet Inc.’s stock to surge, adding nearly $1 trillion in value in just a few weeks. This rise in stock significantly reflects Warren Buffett’s $4.9 billion investment in Google.
In a recent trading session, Alphabet’s shares saw an increase of up to 3.22%, putting the company on track for a unique milestone of reaching a $4 trillion market cap.
Interestingly, Google’s competition with OpenAI is heating up. While SoftBank, a major backer of OpenAI, saw its shares drop amid concerns over Google’s advancements, Nvidia’s stock also took a hit, erasing $243 billion in market value.
Neil Shah from Counterpoint Research pointed out that Google has always been a strong contender in AI but is now more visible than ever. The company has immense resources at its disposal: an extensive database for training AI models, consistent profitability, and robust infrastructure.
Google’s CEO, Sundar Pichai, emphasized that the company has taken a comprehensive approach to AI. To date, regulatory concerns that might hinder Google’s growth seem to be fading. Recently, the company avoided significant penalties in an antitrust case, partly due to the competitive pressures from emerging AI players.
On top of that, Google is branching out beyond just search. It’s making strides with Waymo, its self-driving car project, which is expanding into new cities. Google’s unique advantage lies in its ability to produce nearly everything for AI, from applications to cloud services and the chips that power them. This gives the company a degree of control that others like OpenAI may not have.
While Big Tech rivals like Microsoft and OpenAI work on developing their own AI hardware, Google has been doing this for years with its tensor processing units (TPUs). Recently, AI startup Anthropic announced plans to use up to 1 million Google TPUs, significantly solidifying Google’s presence in the hardware market.
Market analysts see Google’s chip developments as a strong signal. Ben Barringer, from Quilter Cheviot, noted that while many companies struggle with custom chips, Google is well-poised for success in this area.
Despite Google’s impressive AI advancements, consumer interest is mixed. Google reported 650 million users of its Gemini app, while OpenAI’s ChatGPT boasts 800 million weekly users. Monthly downloads for Gemini are at 73 million, a bit lower than ChatGPT’s 93 million.
Though Google dominates the advertising space, it has historically faced challenges in diversifying revenue. Its cloud segment reported $15.2 billion in revenue, a 34% increase year-over-year, but it still lags behind Microsoft and Amazon in cloud sales. Neil Shah noted that Google is lagging in AI adoption compared to these competitors.
In contrast, OpenAI is targeting profits by offering premium versions of its software. It also partners with various chip manufacturers to support its growth, demonstrating the competitive landscape of AI development.
The AI chip sector is not simply a contest between a single winner. Companies using Google’s TPUs must operate within Google’s cloud ecosystem. In contrast, Nvidia’s GPUs offer more flexibility and are available across various platforms.
Despite ties to a single supplier once being a deterrent, Google’s AI strides are changing perceptions. Thomas Husson from Forrester remarked that Google has undeniably repositioned itself as a formidable contender in AI, debunking any narratives of its decline.
Google is back in the game with Gemini 3, and it seems more competitive than ever in the fast-paced world of artificial intelligence.
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