ChatGPT vs Google Bard
Last week I wrote about Alphabet (NASDAQ: GOOGL) and the problems they face after its recent earnings call. Like Meta Platforms (NASDAQ: META), Alphabet relies heavily on ad spending from other businesses. Declining growth and stagnant YouTube revenue are really dragging down the stock so far in 2023. The last thing Alphabet needed was a legitimate threat to its search platform.
Earlier this year, Microsoft (NASDAQ: MSFT) announced it would be taking a $10 billion stake in ChatGPT. For those who haven’t heard, ChatGPT is an AI Chatbot by a company called OpenAI. Microsoft recently announced it would be integrating ChatGPT into a number of products including Microsoft Teams and the Bing search platform.
Until now, Google held a monopoly over internet searches. Bing accounted for less than 3% of total searches in 2022, whereas Google held a more than 91% share. In the most recent quarter, Google Search brought in more than $42 billion in revenue. This accounted for more than half of Alphabet’s total quarterly revenue of $76 billion. If Microsoft were able to take some of that share from Alphabet, it would likely have a substantial impact on Alphabet’s bottom line.
What is Google Bard?
Many were surprised by Alphabet’s sudden announcement of its Google Bard AI chatbot. We have been hearing about ChatGPT for months now. As soon as Microsoft announced it would be integrated into Bing, Alphabet made its own announcement regarding the release of Bard. On Wednesday, Alphabet held the live stream of Bard from Paris, France. Unfortunately for shareholders, it did not quite go as planned.
While the presentation itself was fine, Google Bard made a factual error during the presentation. Alphabet’s stock immediately tumbled and closed the day down by about 8%. Was this a failure by Google or was it just a risk of relying on artificial intelligence?
It is clear what investors thought. But let’s take a second to think about this. Are people really going to abandon Google Chrome just because Bing now has ChatGPT integration? A vast majority of people who use Google Search already refer to looking something up on the internet as “Googling it”. Most people are not going to care about an AI Chatbot that can provide further assistance.
Is GOOGL a Stock to Buy on this Dip?
In the past, I’ve certainly been bullish on Alphabet even though last week I wrote that it is the big tech company I am most concerned about right now. While the issues with ad spending and declining YouTube growth are concerning in the short term, I don’t see the ChatGPT Bing integration as a long-term issue. The sell-off seems like an overreaction to one demonstration. Do we know for sure that this will be an issue for Google Bard in the future? We already know that ChatGPT has its own shortcomings.
Don’t fall for these sudden sell-offs. There will likely be plenty of buyers preparing to add Alphabet’s stock in the coming weeks. Just because ChatGPT is the hottest thing right now, it does not mean that both Alphabet and Microsoft can’t succeed by integrating AI into web searches.