Better Buying AI: Microsoft and Alphabet Stocks

After the launch of ChatGPTMicrosoft (NASDAQ resonance code: MSFT)respond in singingAlphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)Microsoft and OpenAI, the parent company of ChatGPT, have become major competitors, and the battle has continued. Microsoft has allied itself with OpenAI, the parent company of ChatGPT, while Alphabet has tried to challenge its leadership with products like Bard and later Gemini. So which artificial intelligence (AI) stock is the better buy?

Microsoft beats the competition

Jeremy Bowman (Microsoft): In technology, the question of "build or buy" is a common one, and in the field of generative AI, Microsoft and Alphabet are moving largely in different directions.

Microsoft has reportedly tied its fate to ChatGPT's parent company, OpenAI, through a $13 billion investment, which allows Microsoft to essentially use OpenAI's technology as its own. As a result, the tech giant has been able to utilize OpenAI's technology in its Azure cloud infrastructure services, GitHub repository, Office suite and Bing search engine, among other products.

These measures are already having an impact, with Microsoft saying that AI added 6 percentage points to Azure's growth in the most recent quarter.

Microsoft's diversity is also one of its competitive advantages. Unlike Alphabet, which generates most of its revenue from search ads, Microsoft has a wide range of products, including enterprise software, video games, cloud computing, and social media, which gives it more opportunities to leverage the power of artificial intelligence.

Microsoft is also more active than Alphabet in the field of artificial intelligence. Chief Executive Officer Satya Nadella has clearly been planning for this moment for years, as Microsoft first invested in AI back in 2019.

Alphabet has been investing in AI for several years now, but the company has been hesitant to release new products, and when it has, it has not always been successful; Bard's initial presentation was sloppy and widely criticized, and Gemini has been criticized for historical inaccuracies.

Microsoft has no intention of slowing down in AI; it just hired Deepmind co-founder Mustafa Suleyman, who also co-founded the recently shuttered Inflection AI. Microsoft's stock may be expensive, but it deserves to trade at a premium. It's hard to keep up with the AI leaders.

Alphabet's Moon Landing Plan to Reinvent Tech

Anders Bylund, Alphabet:I have a lot of respect for Microsoft, but Redmond's finest can't compete with Alphabet's ultimate long-term plan.

Alphabet's vision and unwavering commitment to pushing the boundaries of innovation make it a great choice for investors looking for long-term growth. The company's core business - Google's online search and advertising - dominates the search engine market. However, Alphabet's ambitions go far beyond search, and the company has been investing in 耑 technologies that have the potential to reshape the industry.

One such area is artificial intelligence, where Alphabet has made breakthroughs in R&D. From natural language processing to computer vision, Alphabet's AI technologies are used in everything from healthcare research to self-driving cars. From natural language processing to computational awareness, Alphabet's AI technologies are used in everything from healthcare research to self-driving cars.

In addition, Alphabet's commitment to the "Moon Project" through its X division demonstrates the company's willingness to take calculated risks in the pursuit of revolutionary innovations, as demonstrated by projects such as Intrinsic, an industrial robotics program, and Loon, a project designed to provide Internet access to remote areas through high-altitude balloons. Projects such as Intrinsic, Alphabet's industrial robotics program, and Loon, which aims to provide Internet access to remote areas through high-altitude balloons, are examples of the company's bold and long-term thinking.

To make a long story short, as the tech market evolves, Alphabet is well-positioned to meet the challenges. In addition, Alphabet's stock price is much more affordable than Microsoft's. Today, you can buy Alphabet at 6x sales or 27x free cash flow. Today, you can buy Alphabet stock at a reasonable price of 6x sales or 27x free cash flow. Multiply those numbers and you can estimate the ratio of Microsoft's stock price.

To me, it looks like Microsoft's stock is due for a correction, and Alphabet is poised to move higher. It's a simple choice.

Invest $1,000 now

It pays to listen to our team of analysts when they have stock investment recommendations. After all, they've been running a newsletter for 20 years called "The New York Times".Motley Fool Stock AdvisorIt has more than tripled the market*.

They have just announced what they think investors are currently doing.-est (superlative suffix)Worth Buying10Only ...... Microsoft made the list, but there are 9 other stocks you may have overlooked.

View these 10 stocks

*Stock Advisory Rates as of March 25, 2024

Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's Board of Directors, and Anders Bylund owns shares of Alphabet. Jeremy Bowman has no position in any of the stocks mentioned above. the Motley Fool holds recommendations on Alphabet and Microsoft. the Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. the Motley Fool has a disclosure policy. the Motley Fool has a Disclosure Policy. The Motley Fool has a disclosure policy.

Better AI Buying: Microsoft vs. Alphabet Stock Comparison was originally published by The Motley Fool.