Google's big offensive on the quantum computing and AI fronts has set the stage for a hefty stock gain this week.
Alphabet slipped Thursday joining a broad market retreat on what appeared to be a wave of profit taking after the Nasdaq topped 20,000 for the first time in history.
But it was still a strong week for the parent of Google.
The shares reached a record high Wednesday as the tech behemoth took the wraps off a quantum computing chip called Willow, and Gemini 2.0, described by CEO Sundar Pichai as the company's "most capable" AI model. Google stock was on track to post a weekly gain of nearly 10%.
The back-to-back news underlined the Silicon Valley giant's intense rivalry on the AI front with Big Tech rivals led by Microsoft and its partner, the trailblazing startup OpenAI, which unleashed the AI frenzy with ChatGPT two years ago.
"The battle for the best AI chatbots is like a game of leapfrog. Google's new model appears to leapfrog Open AI but expect Open AI to play leapfrog with them too," industry analyst Tim Bajarin, chairman of Creative Strategies, told Investor's Business Daily.
Google Stock Climbs Amid Product Rollouts
Gemini 2.0 gives Google an edge, and its stock a boost, "but competition will continue to push them and others to new heights," he added.
The competitive threat was highlighted last week by Melius Research analyst Ben Reitzes, who argued in a client note that "OpenAI may be closer to disrupting Google than you think."
Reitzes pointed to OpenAI's momentum with the rapid growth of ChatGPT.
"If Google usage stays flattish, OpenAI's usage may catch up well within 10 years as it adds features (and makes its search better too)," he wrote. "What if they figured out how to sell ads? Would that ad be as valuable as a Google search ad? How much budget gets diverted from Google if this happens? Just sayin."
Creative Strategies' Bajarin called Willow, Google's quantum computing chip, "a really big deal" and "a staggering feat at this time."
"However I would caution that it may take several years and significant further development before quantum computers can address a broad range of real-world challenges," he said.
Still, this week, at least, the AI spotlight was on Google.
Google stock has soared above its 50-day moving average and its 21-day exponential moving average. The stock's Relative Strength Rating climbed back up to a strong 86, up from 41 three months ago, according to IBD MarketSurge.
