Microsoft’s integration of ChatGPT into its Bing search engine has raised speculation that the move might lead to a competition with Alphabet’s Google ecosystem. However, the reality might be that both companies will emerge as winners in the long run.
Why Both Companies Might Win
With the integration of ChatGPT, Microsoft will spark greater utility for Bing, which was previously considered an afterthought compared to Google search engine. The increased usage of Bing will allow Microsoft to organically advertise other business units, from video games to its core business applications. Furthermore, the incorporation of ChatGPT could attract a whole new audience to Bing.
On the other hand, Alphabet’s Google dominates the search engine market with a market share of around 90%. The demand for human-operated research functions is unlikely to cease, and it’s possible that ChatGPT’s introduction may actually help Alphabet. The AI question-and-answer platforms help narrow a human operator’s search parameters. From there, they can conduct targeted research.
The Financials
Both Microsoft and Alphabet have similarly enticing financial profiles. Microsoft boasts a three-year revenue growth rate of 17.4% and a book-value-per-share growth rate of 18.6%. In addition, its trailing-year net margin stands at 33.05%. Alphabet’s three-year revenue-per-share growth rate comes out to 22.9%, and its free-cash-flow-per-share growth rate during the same period is 27.2%. Its net margin stands at 21.2%.
Wall Street Ratings
Microsoft and Alphabet both have a Strong Buy consensus rating from analysts. The average MSFT stock price target is $301.83, while the average GOOGL stock price target is $127.48.
Conclusion
Although ChatGPT integration appears to put Google under the clock, the narrative could be more symbiotic than previously imagined. ChatGPT will provide greater utility for Microsoft Bing, but as a function of effectively limiting search parameters. For in-depth research, AI platforms still have plenty of work to do. Therefore, Google’s acumen in search engines should benefit GOOGL stock. Both Microsoft and Alphabet have a promising financial future, and investors should be bullish on MSFT and GOOGL stocks.
