Rumours of Google’s search engine demise have been greatly exaggerated

Nvidia isn’t the only high-flying AI stock. A basket of AI stocks has outperformed the S&P 500 by 62 percentage points this year, according to Goldman Sachs. One such stock is Google parent Alphabet – something many doubted a few short months ago.

In early February, Alphabet shares lost more than $100 billion (€92.7 billion) in one day after Bard, Google’s AI-powered chatbot, gave the wrong answer in a promotional video. Investors worried Google’s search dominance was under threat from Microsoft-backed ChatGPT.

Alphabet’s share price woes continued, quickly losing 18 per cent of their value. However, recent data from various analytics firms suggests Microsoft’s search engine, Bing, has not eaten into Google’s market share.

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As Bespoke Investment notes, obituaries for Google have been premature. Alphabet stock is up almost 50 per cent this year, and has now outperformed Microsoft’s since November’s ChatGPT release.

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It’s easy to be wrong-footed by market movements. Cathie Wood, the high-profile fund manager who runs the ARK Innovation exchange-traded fund (ETF), sold her shares in Nvidia in February, saying the stock’s valuation was “very high”. Since then, Nvidia has more than doubled. Market sentiment is fickle. Google, Microsoft, Nvidia – predicting how the AI race will turn out is a tricky business.