Trillion-Dollar Titans: Who Will Win The AI Battle?

The success of the artificial intelligence (AI) search engine ChatGPT, which recently reached 100 million users, led Google’s management to officially declare “code red” in December. 

And Google is right to be pursuing an AI rival to ChatGPT with urgency — the dominance of search engines it’s enjoyed since the late 1990s is under siege. Google earned $178 billion in 2021 from its search engines. 

One executive at Google called the AI scramble “make or break” for the company. And sure enough, when Google’s AI chatbot Bard stumbled during its debut earlier this month, giving a wrong answer on a question about the James Webb Space Telescope, Google shares suffered a $100 billion selloff. 

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Some of the world’s most brilliant engineering and programming minds are no doubt working overtime to help Google fix the problem. But smaller companies may still have the upper hand. As Margaret O’Mara, a history professor of the University of Washington who is an expert on SIlicon Valley told The New York Times, “For companies that have become extraordinarily successful doing one market-defining thing, it is hard to have a second act with something entirely different.”

This could explain why shares of trillion-dollar companies like Microsoft Corp. MSFT. haven’t seen such a boost yet from their progress in AI, while small-caps like C3.ai have soared more than 100% for the year. 

With Microsoft valued at $1.95 trillion, a 10 times return would make its valuation in the neighborhood of America’s current $25 trillion gross domestic product, which seems unlikely. But smaller, more nimble companies that capture just a few billion dollars of market share in the AI windfall could deliver massive returns in the months and years ahead. 

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