Google and Microsoft Tussle over the Future of AI

Investors on Wall Street expressed relief as Google-parent company Alphabet joined Microsoft in beating market earnings expectations. Alphabet reported a 3% total year-on-year revenue increase, while Microsoft reported a near 9% bump. 

After a disastrous year for both stocks, their shares came out of the first quarter on stronger footing. Shares of Alphabet were up about 1.7% in Tuesday’s trading, while shares of Microsoft were up 8.5%.

Though both companies saw major upticks in their search and cloud-computing businesses, it was the bright future of AI that enthused executives from both companies.

Microsoft, Google and several other rivals are in a frenzied race to integrate generative artificial intelligence (AI) functionality into their search functions and other applications.

Although both Google and Microsoft see AI as a key part of their near-term future, analysts are backing Microsoft to consolidate its early lead in the segment while expressing concerns that Google is falling behind its competition when it comes to AI innovation. 

Google’s hastily introduced AI chatbot named Bard, released well after Microsoft-backed ChatGPT, was met with some unflattering reviews. By contrast, Microsoft has reported that app installations for its revitalized AI-powered Bing search engine have gone up four-fold this year alone.

Google’s search engine has dominated the market for two decades, with Microsoft’s Bing lagging in the distance. However, the viral success of ChatGPT has placed Microsoft in a strong position to catch up. Analysts believe that although other major tech firms will have a role to play, the main AI battle will be waged between Google and Microsoft.