In the last quarter, the growth of Google's parent company, Alphabet, in the cloud business was significantly below market expectations, trailing behind Microsoft and Amazon. This briefly caused their stock price to dip to $120 after the financial report announcement. However, with a general improvement in risk sentiment in the fourth quarter, the company's stock price rose by 58.3% in 2023.
As competition intensifies in the field of AI, Google launched the large-scale language model Gemini in early December, divided into three versions—Ultra, Pro, and Nano.
On December 14, Gemini Pro's API was made freely available to the public, offering users a chance to experience the visual AI model for free, unlike the paid version of OpenAI's GPT-4. However, initial third-party test data suggests that Gemini Pro is currently on par with OpenAI's ChatGPT-3.5 but still lags behind GPT-4. Therefore, Google may have some way to go to establish a leading position in the AI field.
Gemini Ultra is currently only available for internal employee use, with expectations for public release by March this year. However, Google's competitor OpenAI has announced plans to significantly upgrade its model, surpassing all existing AI products in the market. Even with the introduction of Gemini Ultra, Google may struggle to overcome its current lag.
While Google's search system, YouTube, and Android ecosystem have brought in a robust user base, its competitors, Microsoft and Amazon, are actively collaborating with other companies in the cloud services sector. For example, Microsoft has invested in OpenAI, and Amazon has invested in Anthropic. Google's progress in self-developed projects has consistently lagged behind the other two.
The good news is that even though Google might be lagging in the field of AI, it still maintains a leadership position in the search business, holding over 90% of the market share, while Microsoft's Bing Chat contributes only 1% to its search business growth.
Google's Focuses for 2024:
Cost reduction and efficiency improvement are likely to remain Google's primary strategies for this year. In January 2024, Google has already laid off another 1000 employees across various departments, intending to enhance company productivity and achieve cost control.
As we properly enter 2024, the external environment faces downward economic trends and geopolitical instability, while internally, challenges include cancelling multiple product lines, employee layoffs, and negative feedback from users due to the cessation of product releases.
As AI continues to evolve, considerations for the security of AI models may be something overlooked by the current capital markets. With the continuous improvement of large model functionalities, the high information collection capabilities demonstrated by AI models sharply contrast with the current global situation of anti-globalization, potentially impacting regional restrictions on user access.
Google's Forecast for the Fourth Quarter of Fiscal Year 2023:
Release Date: After-market on January 30th
Possible Revenue: $707.1 billion, YoY growth of 12.03%
Earnings Per Share: $1.6, YoY growth of 52.38%
Data Source: Zacks Research
