Ark Invest's chief futurist on how AI race threatens Google's 'fragile' business model

Published Sun, Feb 19 20238:20 AM EST

As the heated battle between two tech giants for chatbot superiority rages on, one analyst sees a significant leg up for Microsoft . "I think Google is fundamentally impaired by this transition to AI," Brett Winton, the chief futurist at Cathie Wood's Ark Investment Management, told Melissa Lee on CNBC's ' Fast Money ' recently. Winton said that Google's dilemma stems from claiming to possess chatbot technology, but the transition to AI jeopardizes both the company's search margin cost structure and its ability to generate revenue from those searches. "Their entire business model is built around taking people and delivering them to the next byte, and these AI systems actually deliver answers to the end users" he said. "So, search as a waystation to the rest of the internet, it's not going to persist as a typical user behavior over the course of this business cycle." Winton's assessment follows Alphabet's introduction of its Bard chatbot technology tool last week, which garnered criticism from employees and viewers after errors were pointed out in the presentation. Microsoft's OpenAI integration into its Bing web browser boosted Microsoft's stock when released, even though it too has received its share of criticisms. MSFT YTD mountain Microsoft YTD "[Google's] entire business structure revolves around this idea that people go to a site to go to another site to get to their answer," he said. 'Fragile' model Moving forward, Winton doesn't see head-to-head competition between search engines necessarily leading to a winning AI strategy. "I think Google's model is fragile, and it doesn't necessarily accrue to Microsoft's benefit," he said. Instead, Winton sees Google protecting its product through heavy investment in AI inferencing and potentially driving business towards NVIDIA , which is a partner in its Cloud platform. He also considered Microsoft's strategy in launching its AI-powered search engine as a means to collect data for its office franchise. "It's much clearer that there will be a lot of money spent on AI investment," Winton said, adding that the key for either tech giant to be well-positioned is by providing AI capabilities in their software." "[In the days of the] early internet, the winner was not the Amazons and the consumer facing internet companies that we think of today," he explained. "It was Cisco ." At its onset, Winton said that internet companies like Cisco provided the infrastructure for users to get online. Today, he sees chipmakers which provide the infrastructure for chatbots as having the upper hand. "Companies in the private space, like MosaicML , who are who are enabling enterprises to build these AI models for themselves," Winton said. "It's really interesting, and I think Google is very vulnerable."