Google has reasserted its leadership in artificial intelligence with a flurry of breakthroughs, which have revitalized investor confidence and driven its stock to record highs. The tech giant impressed investors with the launch of Gemini 2.0, an advanced AI model that outperformed rivals in benchmark testing, and a new generation of its custom AI chip, Trillium, aimed at challenging Nvidia’s dominance in the market.

Over December, Google also unveiled a range of new AI applications, including Project Mariner, which helps users compile research reports, and Project Astra, which enables real-time queries across text, video, and audio, including through smart glasses. Another significant launch was Veo 2, a video generation AI model that produces realistic, high-quality clips from text or image prompts. These advancements have helped Google move past criticisms that it had fallen behind its competitors in the AI race, particularly after OpenAI’s release of ChatGPT in late 2022.

Ethan Mollick, a professor at Wharton Business School, called the developments “astonishing,” highlighting the rapid pace of progress in AI. “This isn’t steady progress—we're watching AI take uneven leaps past our ability to easily gauge its implications,” he said, emphasizing the rapid advancements made in the last week.

Google also made waves in the quantum computing field with the release of Willow, a quantum chip capable of stabilizing qubits for longer periods, which improves computation accuracy. The company claimed that Willow could perform tasks in five minutes that would take conventional supercomputers 10 septillion years. Although quantum computing remains years away from commercialization, this breakthrough positions Google as a leader in the field.

These advancements, coupled with Google’s continuous profit growth, have fueled a 38% increase in its stock this year, bringing its market value to $2.3 trillion. Despite this success, a gap of $1 trillion remains between Google and Microsoft, its closest competitor.

After a year of challenges, including the rise of AI-powered products from competitors like OpenAI, Google’s CEO Sundar Pichai has voiced confidence, challenging Microsoft’s Satya Nadella to a head-to-head comparison of AI models.

FT