Microsoft is the stock to buy as it leads the AI arms race while Alphabet continues to play catchup with Bard, according to Wedbush
"[Microsoft] remains in an enviable position to gain share in its enterprise backyard against AWS in this cloud arms race over the next 12 to 18 months," Ives said."We also believe Redmond is just starting to hit its next gear of growth with ChatGPT and AI also adding a new layer of growth to the Microsoft story over the coming years."
Ives reiterated his"Outperform" rating on Microsoft and said it remains a"best idea." Additionally, he increased his price target on Microsoft to $340 from $325, representing potential upside of 9% from current levels. While Alphabet continues to play catchup in the AI space, it is setting up to go head-to-head for market share against Microsoft, especially as the search company has indicated that it plans to incorporate AI capabilities into all aspects of its product suite, including the cloud.
"With demand for AI applications accelerating across industries, we view the improvements and integrations of generative AI across Google's entire portfolio as a positive in the AI battle as it now comes down to who can gather market share as the advancements are released throughout the year," Ives said.he still favors Microsoft over Alphabet, with no formal recommendation or price target for Google.
"We continue to strongly believe that Microsoft's game changing early investment in ChatGPT got the key head start on the AI front in this Game of Thrones battle for big tech with Google now playing major catchup mode," Ives said.
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