Google’s efforts this month to reestablish itself at the forefront of technology search and artificial intelligence propelled its stock to a record high while allaying criticism that it has fallen behind rivals .

During December, the Big Tech group impressed investors with a more advanced version of its AI models and applications called Gemini 2.0 which beat its rivals in benchmark tests.

In a series of coordinated releases, the company also unveiled a new generation of its custom AI accelerator chip – a tensor processing unit (TPU) called Trillium – that aims to challenge Nvidia’s near-monopoly on the market.

Google also added the ability to act on behalf of users and compile complex search reports (Project Mariner) and respond to queries in real time in text, video and audio (Project Astra), including via smart-glasses. And that spear video and image generation models called Veo 2 and Imagen 3.

“The past month has transformed the state of AI, with the pace accelerating dramatically last week,” said Ethan Mollick, a professor at Wharton’s business school and author of a book on AI. technology, describing Google’s releases, particularly Veo. 2, as “amazing”.

“This is not steady progress: we see AI making uneven progress beyond our ability to easily assess its implications,” Mollick added.

In addition, Google confirmed last week that it had carried out a breakthrough in quantum computing with a chip called Willow. It can keep qubits stable for longer, reducing errors and allowing them to perform useful calculations.

The company claims It can complete tasks in 5 minutes that would take conventional supercomputers 10 seven billion years, but this elusive technology remains years away from commercial application.

In October, Sir Demis Hassabis, founder of Google’s AI research lab DeepMind, and his colleague John Jumper shared more of their research lead. Nobel Prize in Chemistry to predict the structure of every known protein using AI software known as AlphaFold.

The showcase of technological advances — accompanied by three consecutive quarters of double-digit profit growth – helped revive parent company Alphabet’s share price.

The stock is up 38 percent this year and briefly hit a record high of $199.91 this week, giving it a market capitalization of $2.3 billion. However, there remains a gap of 1,000 billion dollars to close with Microsoft.

Since the release of ChatGPT in late 2022, Google has appeared to squander its early advantage in AI, having incubated the underlying research, particularly when its main rival Microsoft partnered with OpenAI. It took Google a year to release its own comparable version, Gemini.

“Alphabet has been under scrutiny since the release of ChatGPT,” said Tiffany Hsia, U.S. equity portfolio manager at company shareholder AllianceBernstein. “Gemini 2.0 and the quantum chip restore investors’ confidence that they are one of the leading technology powers.”

In a sign of growing confidence, Chief Executive Sundar Pichai – who had faced some of the harshest criticism during his nine-year tenure for slow AI deployment in the spring – challenged his Microsoft counterpart , Satya Nadella.

“I would love to do a side-by-side comparison of Microsoft’s own models and our models any day, any time,” Pichai said at the DealBook Summit earlier this month. He added with a smile that what’s more, “they’re using someone else’s models.”

As the company demonstrates its technological strengths, it must figure out how to integrate these innovations into its consumer and commercial applications without stifling the creativity of its engineers.

Pichai has consistently sought to integrate AI into its search engine, while needing to placate investors concerned that such a move could cannibalize advertising revenue.

The search giant still controls 90% of the market, but for the first time in decades it faces real competition from AI-based products from groups such as OpenAI, Anthropic and Perplexity, which can provide complete answers rather than links.

Until now, Google’s solution has been “AI previews,” brief responses to queries at the top of its results page. Executives said the feature was popular, but early evidence suggests users are clicking on introductory ads at a lower rate – down 8% year over year in the third quarter, according to research by the Skai advertising platform.

Other threats remain. After losing a major antitrust case against its research arm in August, the Justice Department is while searching to force the sale of its Chrome browser, cancel an exclusive deal to become Apple’s default search engine, and share the trove of user data that underpins proprietary web page ranking algorithms, ad targeting systems and training Google’s AI models.

The company is awaiting the results of another U.S. monopoly trial focused on its advertising technology company when Alphabet’s other main source of revenue could be dismantled.

Another potential danger is Elon Musk. The world’s richest man is dominating President-elect Donald Trump after spending $250 million to help win last month’s US election, gaining the power to influence AI regulation and enforcement antitrust laws.

Musk’s xAI startup also built the world’s largest supercomputer in Memphis, Tennessee, in record time. Dubbed Colossus, it networked 100,000 cutting-edge Nvidia graphics processing units – and plans to expand data center by 10 to 1 million tokens – which should help xAI’s Grok chatbot catch up with the competition in 2025.

“Sundar now seems more confident. Because Google’s philosophy is to be a perfectionist, we might see product launches at a more meticulous and calculated pace, but we shouldn’t be so impatient about it,” said AllianceBernstein’s Hsia. “It’s a race, and recent developments show they’re still in it.”