- Alphabet has one key advantage over Microsoft in the AI race, Gene Munster says.
- It lies in its vast search history, which has a decade's worth more data than Bing has collected.
Alphabet has a key advantage over Microsoft in the artificial intelligence race, and it lies inside of Google's vast trove of search data, according to Deepwater Asset Management's Gene Munster.
Google's decade head start over Bing is a big advantage for Alphabet, Munster said, noting in a thread on Twitter that he is expecting the company to see earnings grow as much as 18% next year.
That's in contrast to Microsoft, which Munster says is a "light year gap" away from what it has promised in the AI space.
"It's advantage Google over here, not just because of the valuation difference," Munster said in an interview with CNBC on Wednesday. "I'm in the belief that Google, their 20-year lead in search is going to inform better AI decisions. We don't see it in the products today, I think that they will deliver on that, ultimately I think that's going to be good for ad revenue."
Both tech giants reported financial results for the second quarter on Tuesday, with Microsoft stock slipping 4% after reporting slowing revenue in its Azure cloud business and issuing lower-than-expected earnings guidance for coming quarters.
Alphabet stock, meanwhile, surged 6% on Wednesday, beating analysts' expectations for revenue and earnings per share.
"$GOOG is up 6% in after-hours and I believe is still not getting the AI credit," Munster tweeted on Tuesday following the company's earnings release.
A handful of mega-cap tech firms have emerged as leaders in the artificial intelligence space, as the hype for ChatGPT continues to grip Wall Street. Other strong competitors include the Nvidia, Tesla, Meta, and Amazon, and Apple, which have all ramped up investments in AI.