Microsoft-backed ChatGPT has set the internet abuzz, and it's prompted investors to wonder what it means for Alphabet.
The launch of Microsoft -backed ChatGPT has set the internet abuzz, and its popularity is prompting investors to wonder what it means for Google-parent Alphabet . Analysts say the platform could be a threat to Google's bread-and-butter search business . ChatGPT, created by San Franciso-based OpenAI , is an artificial intelligence chatbot able to answer questions and write essays . Alphabet and Microsoft compete in the cloud business.
Pro spoke to fund managers and trawled through Wall Street research to find out how the two stocks might perform — and whether they have a favorite. Microsoft Gil Luria, senior software analyst at D.A. Davidson, said in a Jan. 17 report that there's some upside for Microsoft shareholders — thanks to ChatGPT, combined with Microsoft's cloud business Azure's position to handle "material portions" of the computing demand generated from ChatGPT usage.
Pro that both tech giants have "very powerful" underlying businesses — but he's more optimistic on Microsoft over the short to medium term. "MSFT is almost unrivalled in terms of their market positioning for productivity tools," Masters said. "Then add in the leading position in Cloud with Azure and you have a very strong business positioning.
Pro. Sean Stannard-Stockton, chief investment officer at Ensemble Capital, was more optimistic about Alphabet. He said that while the firm is experiencing lower revenue growth than expected, its profit margins remain near record highs.
in early January. He said he is monitoring ChatGPT and its partnership with Microsoft's Bing as a potential threat to Google Search. "But we don't think AI chatbots are all that material of an alternative to Search," he concluded. According to FactSet, analysts covering Alphabet gave it 35% upside on average, while 92% gave it a buy rating.
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