Key Highlights
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Alphabet possesses the most comprehensive AI technology stack among all companies.
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Having developed its own advanced AI chips, Alphabet enjoys a cost advantage over its clients.
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Additionally, it leverages AI to enhance growth in its primary search operations.
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If you’re interested in a leading company in artificial intelligence (AI), Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) stands out. It boasts the most extensive AI technology stack globally.
At the core is its Gemini large language model (LLM), consistently ranked among the best. This model is integrated across various sectors, from cloud computing to search. Search remains Alphabet’s primary revenue source, utilizing Gemini to enhance its functionality with AI-driven features such as Lens for visual searches and AI Overviews.
With features like AI Mode, users can switch between traditional searches and full AI chatbot interactions. This integration has led to increased search queries and revenue growth for Alphabet. The company benefits from a significant competitive edge due to its dominance of the internet through the Chrome browser and Android operating system, both holding over 70% market share, along with being Apple’s default search engine.
Emerging Leader in AI Chips
In addition to the Gemini model, Alphabet has developed exceptional custom AI chips known as Tensor Processing Units (TPUs). Created over a decade ago, these chips have proven effective for the company’s internal workloads. The use of these application-specific integrated circuits (ASICs) for training Gemini and conducting inference provides Alphabet with a structural cost advantage compared to its rivals.
Alphabet’s TPUs are more cost-effective than Nvidia’s graphics processing units (GPUs) and utilize less energy, fostering a beneficial cycle that allows for further investment in AI infrastructure and cloud computing expansion. This year, the company plans to allocate $175 billion to $185 billion for data center infrastructure.
Furthermore, Alphabet has begun granting some clients access to its TPUs, creating an additional revenue stream. Estimates suggest Alphabet could earn $13 billion for every 500,000 TPUs utilized by clients, and discussions are underway with several neocloud firms to broaden TPU application beyond Google Cloud.
Should You Invest in Alphabet Stock?
Before considering an investment in Alphabet, it’s important to reflect on the recommendations from the Motley Fool Stock Advisor analyst team, which recently listed what they believe to be the top 10 stocks worth considering now, excluding Alphabet. The chosen stocks are expected to yield substantial returns in the future.
It’s noteworthy that Stock Advisor boasts an average return of 927%, significantly outperforming the S&P 500’s 194%. Don’t miss out on their latest top 10 list, friendly to individual investors.
Geoffrey Seiler holds positions in Alphabet. The Motley Fool also holds positions in and recommends Alphabet, Apple, and Nvidia.
