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Alphabet GOOGL-Q surged 5 per cent on Thursday as Wall Street cheered the launch of Gemini, saying the new artificial intelligence model could help narrow the gap in a race with Microsoft-backed OpenAI.

Long considered a leader in AI research, Alphabet lost the spotlight when OpenAI’s ChatGPT swept the tech landscape upon its launch in November last year and allowed investor Microsoft MSFT-Q to aggressively roll out AI-powered software to businesses.

Now, Gemini looks poised to boost Alphabet’s AI heft again.

The Google parent said the much-awaited AI system was faster than OpenAI’s latest model and can process different forms of media such as video, audio and text. It comes in three versions, each designed to use a different amount of processing power.

“Google is beginning to address investor concerns around generative AI innovation and the high cost of running GenAI models through the combination of Gemini’s different model sizes,” J.P. Morgan analysts said.

The company was on track to add nearly $80-billion to its market value, if gains hold. The warm reception contrasted with the nearly $100-billion selloff in Alphabet in February after its Bard chatbot shared inaccurate information in a promotional video and a company event failed to impress.

“Gemini’s release comes at an interesting point in time when OpenAI/ChatGPT users have been complaining about how updates to the GPT model family have potentially impacted the quality of its output,” Macquarie analysts wrote in a note.

“If Google is shipping a GPT-4-beating model, this could help gather user and developer momentum behind Google.”

In the September quarter, growth at Alphabet’s cloud unit slowed to a near three-year low, paling in comparison to the rebound seen at Microsoft Azure, which benefited from spending by businesses preparing to roll out AI features.

Microsoft currently trades at 30.68 times its 12-month forward earnings estimates, compared with the Google parent’s 19.59.

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