Since issuance artificial intelligence (AI) chatbot ChatGPT It’s late 2022, interest in AI technology is heating up — with America’s largest tech companies racing to claim a piece of the action. And it’s not hard to see why. According to data cited by Statista, the market could grow 20-fold to nearly $2 trillion by 2030, making it a potentially transformative opportunity for companies that can make that cut.
the alphabet (Google 1.16%) (GOOGL 1.11%) And Meta platforms (Meta 1.53%) They are already huge players in the tech world and seem to have what it takes to succeed in AI. Let’s discuss why they can have a place in your investment portfolio.
Since its founding in 1998, Alphabet’s Google has been the go-to platform for people looking for information on the Internet. It has leveraged its prestige to create the largest digital advertising company in the world. Some investors now worry that the moat could soon be eroded by generative AI competitors such as ChatGPT, which could play a similar role. But this may be more of an opportunity than a challenge.
While it is true that generative AI can do some of the same things as traditional search, Google has some major advantages. AI-powered chatbots simply respond to inquiries. And unlike search, it does not allow users to interact directly with the internet to find what they are looking for. Furthermore, these platforms must be trained on a huge set of data, which can be outdated or incomplete because third-party sites refuse to provide access.
For example, Reddit, Twitter, and Stack Overflow no longer allow free access to their data, and other companies could follow suit.
On the other hand, as the owner of the two most visited websites in the world (Google and YouTube), Alphabet’s biggest advantage will be data. The company has a treasure trove of information for training its models. And it’s integrating artificial intelligence into its traditional search work through a platform called Google AI, which integrates the technology into its search results to do things like summarize information.
Google also has its own AI chatbot, Bard, which had some initial hiccups, but this is par for the course, and should fulfill a similar role to ChatGPT by answering questions with human responses.
Known for its social media companies, Facebook and Instagram, Meta Platforms is another tech giant that could be greatly affected by the AI megatrend. While management has spent recent years focusing on Metaverse (immersive virtual reality), seems to be changing course towards what could become a bigger opportunity in the near term.
While Meta Platforms CEO Mark Zuckerberg denies his company is shifting its focus from the metaverse to AI, the company’s top executives are said to spend most of their time on AI projects, according to chief product officer Chris Cox. Like Google, Meta owns a lot of user data (Facebook is the third most visited website in the world), which can be useful for training generative AI models.
The company is actually early in the artificial intelligence race. In September 2022, it announced Make-A-Video, an early-stage system designed to allow users to turn text prompts into videos.
Meta is also exploring how technology can fuel growth in its digital advertising business. This month it announced an AI Sandbox, which will allow customers to access early versions of the tools to create targeted ads via text-to-speech. Such software can help make advertising more efficient and help Meta Platforms strengthen its competitive moat against the competition.
Technology at a discount
While Alphabet and Meta Platforms have recovered sharply in 2023, both companies are still down significantly from the all-time highs ($150 and $382, respectively) they reached in 2021. The dips give investors an opportunity to bet on AI opportunities when Relatively low price levels and grab more potential The long-term upside.
Susan Fry, an executive director at Alphabet, is on the board of directors of The Motley Fool. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, sits on The Motley Fool’s board of directors. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has and recommends posts on Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.
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