Alphabet Adds $115 Billion in Value

May 16, 2023 thejournalbiz

Google Parent, Alphabet has risen 9% since unveiling AI tools on May 9

Alphabet Inc. is back in the game. The artificial intelligence game, that is.

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Alphabet Adds $115 Billion in Value!

Google has risen 9% since unveiling AI tools on May 9, and stock soared After Defying AI Doubters#google #BardAI pic.twitter.com/ywaPz8F0rD

— The_Journalbiz (@the_journalbiz) May 16, 2023

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Shares in the Google owner had lagged behind other megacaps this year amid fears it was losing ground in the race to deploy AI products.

Yet since it unveiled its latest AI tools at a developer’s conference last week, the stock has advanced 9%, adding $115 billion in market value and erasing its underperformance against peers like Apple Inc. and Microsoft Corp.

With excitement around AI building, Alphabet had largely missed out on the stellar gains seen by many of its tech peers, particularly as the rapid growth of OpenAI’s ChatGPT is seen as a potential threat to the dominance of its search business.

So last week’s announcement of a more conversational search engine and that the company is making its AI-powered chatbot more broadly available provided a timely boost.

Morgan Stanley analyst Brian Nowak was among Wall Street analysts heartened by Google’s presentation after what he called “AI overhang” in the stock.

Even after such a strong rally, Alphabet isn’t expensive relative to peers. At 19 times, the stock’s price-to-projected profit ratio is the highest in months, yet it’s still much cheaper than Microsoft and Apple, which are priced at 29 and 27 times, respectively.