What Google’s Gemini Says About the State of Alphabet

Today tells you a lot about the current state of Google and its parent company Alphabet. The tech giant, once the leader in artificial intelligence, unveiled its answer to OpenAI’s ChatGPT with a product—Gemini Pro—that is comparable to what OpenAI released a year ago. It’s easy to miss this nuance amid the deluge of positive press, but Google’s more competitive product—Gemini Ultra—won’t be out until January at the earliest, as we were the first to report. If Google is so slow to respond to competition in this arena, it’s hard to have much confidence in its ability to do much of anything. Google shares lost ground today. Investors know when something isn’t a big deal. (For more on Gemini, see our AI Agenda newsletter today.)

In general, Alphabet shares are in the doghouse with the investment community. Not only does Alphabet trade at a huge discount to Microsoft—its primary AI rival—on a multiple of expected future sales, it trades below even Meta Platforms, according to Koyfin data. Let that sink in for a minute. Meta is not well diversified. Apart from some still-developing efforts in virtual reality and augmented reality, it is overwhelmingly reliant on selling advertising on Facebook (the CBS of social media, given how popular it is with the over-50 crowd) and Instagram. Google, on the other hand, owns the leading search engine and the most successful video-streaming platform—both of which make it dominant in digital advertising—as well the No. 3 cloud firm. Alphabet’s self-driving–car development unit, Waymo, is surely the most advanced in the country. Google has tentacles in the smartphone business. It even operates a cellular service! And yet investors prefer Meta!