I could have used artificial intelligence on my trip to Spain last month. Wandering the ancient streets, the medieval techniques of maps and guidebooks guided me to every tourist trap and dead end.
So last week I focused on AI demos from Google and others. Because confused travelers seem to be one of their favorite use cases. They showed me some smart travel tools that might point me in the right direction on my next trip.
Google's parent company Alphabet's stock quickly headed in the right direction as investors decided it was keeping up with ChatGPT developer OpenAI and its partner Microsoft.
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Alphabet stock, which has risen 7% since Monday, has dispelled concerns that its 90% share of search activity could be eclipsed by AI rivals. Alphabet is up 30% since those concerns peaked in early March, while Microsoft is flat.
Google's annual developer conference started on Tuesday. OpenAI tried to lead the way with a demonstration of its next-generation technology on Monday. This version of ChatGPT provides quick written or verbal answers when prompted with any combination of audio, image, or text input. New forces will emerge in the coming weeks.
This coming Tuesday, Alphabet CEO Sundar Pichai and his colleagues showed off Google's unique multimedia capabilities through an AI engine known as Gemini. AI assistants and advisors will be built into the entire Google ecosystem. Gmail remembers your inbox and provides suggestions for your projects. Your Pixel phone understands and tracks what your camera captures and reminds you where you left your glasses. Google Search now displays a long blue list summary of search results.
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Pichai claimed that Gemini AI will prove more useful than its competitors as Google has indexed 1 trillion up-to-date facts about the world and can also hold more facts about users. .
Capital letters of Alphabet, Microsoft, Amazon.com
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Facebook's parent company, Meta Platforms, has signaled that investors are each spending $40 billion a year building AI infrastructure and expect a return. But what will the payoff be?
Travel is a good case study. According to Morgan Stanley analyst Brian Nowak, this is one of the top five paid search advertising categories, and Google Search is the first stop when planning a trip online.
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Google's keynote on Tuesday featured Gmail as well as travel tools that use all of the company's data on flights, hotels, local attractions, and weather to plot and plan itineraries. If these travel tools become popular, they could open up new search advertising slots and generate $200 billion a year for Alphabet.
On the same day last week, online travel agency Expedia was showing off its AI travel assistant, Romy, at a gathering of business partners in Las Vegas. Built with OpenAI's ChatGPT, Romie lets you plan your trip, join group chats, and get helpful updates about flight changes. She can try it out by visiting her EG labs website on Expedia on her iPhone.
Booking.com has an AI travel planner, also built on the OpenAI platform, and other websites like Priceline also have variants.
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There are many experiments in AI travel.
“The runways are pretty busy,” says Natalie Bowman, a product manager at Alaska Airlines, which has developed AI travel tools for airlines using both Microsoft's version of ChatGPT and Google's Gemini.
Alaska Inspire, a ChatGPT-based helper, answers verbal and written questions, even complex questions like “What flights to Europe can I buy with frequent flyer miles?” Airlines want to see if the tool's ease of use translates into more searches into bookings. You can also increase your revenue per user by finding better, but not necessarily cheapest, flights.
This summer, Alaska Airlines plans to introduce more sophisticated tools powered by Google's AI. Features that set OpenAI's services apart include interactive maps, immersive photography, and timely events in your travel destinations. Google's latest version promises to let travelers search for relevant places using photos, videos, or music.
Bowman said her development group set out to allow searchers to tell Google's AI to provide answers in pirate voices.
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That's exactly what Alphabet bulls want to hear.
Alphabet's share of global online advertising has fallen from 75% in 2015 to about 55% today, with Meta and Amazon taking over that share, said Michael Nathanson, an analyst at Moffett Nathanson. It is said that it accounts for the majority. But Alphabet's revenue continues to rise as the global digital advertising pie expands. His YouTube business at the company has seen ad sales increase 20% annually.
Alphabet bought back its own shares and grew its earnings per share at a low-double-digit pace.
Last week, Nathanson named Alphabet to his company's “best ideas” list. The stock's value is among the lowest in tech megacaps. Amazon's profits will increase 33 times next year. Microsoft and Nvidia trade at about 30x,
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Apple is about 25 times more. Meta and Alphabet are at the bottom, valued at 20 times next year's earnings.
Nathanson believes that Google's valuation of 24x is more appropriate. He estimates the company's core earnings in 2025, excluding sideline losses, will be $8.63 per share, and the stock could rise from the current $176 to $205, a significant 16% increase. I think there is.
Write destination Bill Alpert william.alpert@barrons.com