Generative AI has revolutionized the tech industry, and its impact is being felt by major players such as Microsoft and Google. In the last year, new technologies such as Stable Difussion, Midjourney, and Dall-E2 have enabled high-quality image generation from text prompts. Additionally, the introduction of ChatGPT by OpenAI has garnered attention as probably the most prominent AI system for everyday use cases.
Microsoft has had a close relationship with OpenAI since 2019 when the tech giant announced a $1 billion investment in the company. This investment has only strengthened over time, with Microsoft investing another $10 billion and reportedly owning a 49% stake in OpenAI. The recent integration of ChatGPT with Bing has led some to speculate that ChatGPT could be a “Google killer.” While Google had its own efforts for AI Chat introduced earlier this year (named BARD), the inaccuracies in BARD resulted in Alphabet’s shares dive.
In this article, we will analyze the stock performance of Microsoft and Google for the last year (April 7, 2022, to April 7, 2023) and attempt to draw qualitative conclusions on whether the introduction of ChatGPT has impacted Google’s stock performance. The data was gathered from NASDAQ and analyzed (as well as visualized) using our own tool, Anania (Generative AI platform for analyzing databases and documents).
We begin our analysis by asking Anania to examine the correlation between the daily stock prices of Microsoft and Google for each month excluding April 2023, as there wasn’t enough data for a representative correlation.
Query for Anania: “correlation between price of microsoft and google stocks per month, exclude April 2023”
As expected, both tech giants had quite correlated stock performance (~75% correlation on average), which changed over time. However, it can be observed that the correlation is starting to drop significantly in November and only starts to improve in March. Keeping in mind, that ChatGPT was introduced on October 30th, I assume that it can be the cause of reduced correlation, which could mean that Microsoft’s stock increased as a result, and Google’s did not (at least not as much as Microsoft’s).
To examine this further, let’s ask Anania the average stock prices of Microsoft and Google per month. This will help us to confirm or reject the hypothesis above.
Query for Anania: “microsoft and google average stock price per month”
The chart seems to confirm our initial assumption, as it shows that the increase in Microsoft’s stock price was higher than that observed for Google. However, this visualization isn’t great and can be misleading. The issue is unit stock price differences between those companies which does not allow to clearly observe the relationship. Let’s ask Anania to show us relative values, instead of absolute by calculating the monthly ratio of the average price of Microsoft and Google.
Query for Anania: “monthy ratio of average price of msft and google”
Now, this is the right query to ask. While we observe an overall positive trend in this ratio, meaning that Microsoft’s stock was increasing on average faster than Google’s, we can see that the ratio started to increase even faster six months ago, which is undoubtedly correlated with ChatGPT innovation.
While this is not an advanced technical analysis, it still shows signals for Microsoft enjoying improved stock performance over its competitors during the last 6 months, exactly starting from ChatGPT announcement.
Finally, we let’s examine how Microsoft performs against every other FAANG company. The chart shows that Netflix and Meta have a negative trend, indicating that their increase is faster than what Microsoft observed. Moreover, Meta has the highest increase in stock price during the last year among all those companies.
In conclusion, our analysis using Anania showed that Generative AI, and specifically ChatGPT introduction has had a positive impact on Microsoft’s stock price and a slightly negative impact on Google’s stock price. This is likely due to the integration of ChatGPT with Microsoft’s products, such as Bing and Microsoft 365, which has improved their performance and market trends. Additionally, our analysis demonstrated the ease and simplicity of analyzing data using Anania. Anyone can easily sign up for Anania’s free plan, connect their data, and analyze it themselves.
Anania is a ChatGPT-style assistant for analytics. It works with both structured data (databases, Excel files) as well as unstructured documents (PDFs, webpages). It allows users to perform search and analytics by simply dragging and dropping data and asking questions in a ChatGPT-style interface. No setup or configuration required.