We recently compiled a list of the 10 Biggest AI Stories and Ratings Updates You Should Not Miss This Week. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOG) stands against the other AI stories.
Are Growing Patents in AI from China a Threat to the US?
China and the United States continue to compete against each other as the AI boom continues to reign in the tech industry. On July 2, Reuters reported that China plans to develop 50 new national and industrial standards for artificial intelligence by 2026. The country aims to standardize systems in the artificial intelligence sector by providing thorough guidelines to companies and budding startups. Furthermore, on July 3, Reuters reported that China filed six times more patents than the United States for inventions in AI like chatbots. On a global scale, more than 50,000 patent applications were filed in the past decade, a quarter of which were filed in 2023 alone. China filed 38,000 generative AI applications between 2014 and 2023, while the United States only filed slightly over 6,200 applications during the same period. Of the total applications, ByteDance, Alibaba Group, and Microsoft filed the largest number of applications. The report added that Chinese patent applications covered a wider range of sectors such as autonomous driving, publishing, and document management. South Korea, Japan, and India were ranked third, fourth, and fifth with the highest number of patent applications.
The United States, on the other hand, has reportedly accumulated $55.6 billion in venture capital funding in the second quarter of 2024, the highest quarterly total in two years. On July 3, Reuters reported that the surge in venture capital funding is driven by developments in artificial intelligence. Such is a 47% increase from the $37.8 billion raised by startups in the first quarter of 2024. Significant investments include $6 billion by Elon Musk’s xAI and $1.1 billion raised by CoreWeave. Previously, venture capital funding took a hit, reporting $35.4 billion in the second quarter of 2023 amid high interest rates and sluggish economic growth. While venture capital and investment in AI are increasing, the IPO market remains sluggish.
OpenAI & Anthropic: A Comparative Analysis
While the threat of Chinese innovations looms over the United States, startups in the country are disrupting the industry with key innovations. OpenAI, the company behind ChatGPT, is a leading artificial intelligence company based in the United States. In February this year, OpenAI closed a deal with venture capital firm Thrive Capital, allowing it to buy some of its shares in a tender offer, bringing its total valuation to $80 billion. This is a threefold increase in its value from a few months ago in 2023.
On June 10, OpenAI and Apple announced a partnership to integrate ChatGPT into iOS, iPadOS, and macOS. Users will now be able to access ChatGPT’s capabilities on all these devices without having to switch tools. Siri will also be able to reach ChatGPT when a user asks a question and will present them with an answer directly from the chatbot. ChatGPT will be integrated into Apple’s writing tools, allowing users to create content when required. The development ensures that user security remains intact. Requests are not stored by OpenAI and IP addresses remain obscured. Users may connect to their ChatGPT account, allowing them to choose their data preferences. The integration will be executed later this year and can be accessed for free without having to create an account.
In another update, Apple is reportedly positioned to join OpenAI’s board. On July 2, Reuters reported that Apple is set to get an observer role on OpenAI’s board, part of the agreement made by the two entities a month ago. Phill Schiller, head of Apple App Store and former marketing chief, was selected for this position. The board agreement will take effect later this year. As of yet, Schiller has not attended any meetings.
Anthropic, OpenAI’s direct competitor, is an artificial intelligence startup founded in 2021. The company is led by Dario and Daniela Amodei as CEO and president. The safety and research company is popular for its safety-oriented language models that produce reliable interpretable, and steerable AI systems. On March 27, CNBC reported that Amazon invested an additional $2.75 billion in the startup, bringing its total investment to $4 billion. Anthropic’s valuation at that time was $18.4 billion and closed five different funding rounds worth $7.3 billion in the past year. Amazon will remain a minority stakeholder in the company. Last year, Alphabet’s Google announced an investment worth $2 billion into Anthropic adding to its $550 million funding from earlier.
Claude is the company’s AI platform able to conduct advanced reasoning, vision analysis, code generation, and multilingual processing. Anthropic recently launched Claude 3.5 Sonner, its first release from the Claude 3.5 family. Claude 2.5 Sonnet has set a new benchmark for graduate-level reasoning, undergraduate-level knowledge, and coding proficiency. The new AI platform operates at twice the speed of Clause Opus. Based on an internal evaluation, Claude 3.5 Sonnet was able to solve 64% of problems. On the contrary, Claude Opus was able to solve only 38% of problems. On July 2, Anthropic announced the launch of a new initiative for a robust third-party evaluation ecosystem. The new initiative will be able to fund evaluations developed by third-party organizations to measure advanced features in AI models. The company strongly believes that the initiative will enhance AI safety level assessments, improve safety metrics, and develop infrastructure and tools for evaluations. The safety level assessments will encompass cybersecurity, chemical, biological, radiological, and nuclear risks, model autonomy, national security risks, and social manipulation.
A lot is going on in the AI space and several companies have emerged as interesting AI stories. We have compiled a list of the most interesting AI stories on Wall Street by studying many reports and publications and watching interviews. The list is sorted in ascending order of hedge fund sentiment, which was sourced from Insider Monkey’s proprietary database that tracks over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A laptop and phone open to Google’s services in an everyday setting.
Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 222
Alphabet Inc. (NASDAQ:GOOG) is one of the best AI stories in the market and is well-positioned to exploit the next wave of artificial intelligence and innovation. Google DeepMind, the company’s research lab is making moves to develop new models that will provide teams with a single access point to all the company’s models. The research lab is working relentlessly to improve the Gemini experience. Back in February, the company launched Gemini 1.5 Pro, with accelerated performance across text, audio, video, and code.
Overall, the company’s new AI models and algorithms are 100 times more efficient compared to 18 months ago. Additionally, over 60% of generative AI startups and 90% of generative AI unicorns are customers of the Google Cloud, backed by the company’s fifth-generation tensor processing unit. Additionally, more than one million developers are using its generative AI tools including AI Studio and Vertex AI. The company spent $12 billion on capital expenditures in the first quarter of 2024, twice as much as the expenditure in Q4 2023.
Alphabet Inc. (NASDAQ:GOOG) also launched its NVIDIA chip rival in May. Trillium is the company’s family of AI data center chips, almost five times faster than its previous models. While Google’s tensor processing units (TPU) only account for almost 20% of the market, its advancements promise higher market shares in the future. The sixth generation Trillium chips perform 4.7 times better in terms of computing performance. Moreover, they are also 67% more energy efficient compared to the previous generation of Trillium processors. The new chip will be made available to Google Cloud users by the end of 2024.
Overall, 222 investors held stakes worth $32.35 billion in Alphabet Inc. (NASDAQ:GOOG). Of those, Ken Fisher’s Fisher Asset Management was the highest stakeholder with a position of $6.99 billion.
Wall Street analysts are bullish on the stock. On July 3, Needham reiterated a buy rating on the stock and maintained its price target of $210.
Overall GOOG ranks 4th on our list of the biggest AI stories right now. You can visit 10 Biggest AI Stories and Ratings Updates You Should Not Miss This Week to see the other AI stories that are on hedge funds’ radar. While we acknowledge the potential of GOOG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GOOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
