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3 Stocks at the Front of the AI Chatbot Revolution

The AI chatbot revolution seems to be in full swing, with many impressive large language models (LLMs) looking to grab a slice (or perhaps a big chunk) of ChatGPT’s lunch. Undoubtedly, OpenAI is an incredibly disruptive company that seems to be leading in the AI race. However, it’s important to remember that it’s a race that could span years, if not decades. As such, it may be difficult to call a winner in a race that may never have a finish line!

For now, OpenAI’s chatbot ChatGPT and AI-driven video generator Sora seem to be the early winners of the nascent AI chatbot market. Whether they’ll stay in the lead remains to be seen as more rivals pop up, eager to win the business of everyday users looking to gain productivity enhancements. From Anthropic to Alphabet (NASDAQ:GOOG, GOOGL) and its Google Gemini to Perplexity AI, there are numerous angles to play the booming field of chatbots.

Let’s check out three stocks I believe are at the front of the AI chatbot race.

Microsoft (MSFT)

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Microsoft (NASDAQ:MSFT) stock remains a standout play for investors looking to expose themselves to cutting-edge AI chatbots. As the $3 trillion mega-cap titan looks to make its Copilot service more accessible, functional and customizable for various applications (think of it as a Clippy that’s actually useful!), Microsoft ought to be thrown into the must-watch category as the field of large language models (LLMs) looks to advance.

Undoubtedly, Microsoft Copilot’s “closeness” to the beloved workplace applications in the Microsoft 365 suite that we all use regularly seems to be a considerable advantage the firm has in the chatbot revolution. Heck, Copilot is built into the latest and greatest Windows operating system, making a tough-to-top default option for users seeking a wide range of questions, device-specific or otherwise.

Perhaps Microsoft Copilot has found a way to be closer to PC users than Google, which is basically the front page and default search engine of many of today’s PC users.

Besides everyday users, Microsoft seems to have a significant edge regarding AI coding tools with GitHub Copilot. Given the codebase and Copilot’s “closeness” to PC users, Microsoft sports one of the widest moats in chatbots and generative AI at large.

Alphabet (GOOG, GOOGL)

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Google Gemini’s (previously Bard) early days have been anything but smooth, but in such uncharted (and likely rough) waters, expect plenty of subtle mistakes to happen. It’s better to have the AI mistakes happen sooner rather than later. The important thing is that firms like Google learn from their mistakes. With a relaunch of Gemini’s picture generation tool on the horizon, you can expect the appropriate fixes and guard rail placements.

Of course, it would be nice if Gemini’s image generator was perfect and polished before launch. However, investors shouldn’t punish Alphabet as it looks to make things right. Though Gemini may not be a frontrunner in the chatbot race anymore (at least not on the scorecards of many analysts and investors), I believe its massive data set is an advantage that few rivals can compete with.

The Google search engine could help Gemini gain over rivals. And I think the AI team will ultimately put its tough early days behind it as it looks to improve its product, hoping to lead the chatbot pack, perhaps in as little as a few years.

Salesforce (CRM)

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Einstein GPT is a profound AI technology that could help Salesforce (NASDAQ:CRM) make the most of the AI boom. The company is an enterprise software pure-play that stands to gain plenty as AI chatbot technology takes off.

Not only do business customers have more cash to spend on AI productivity tools and all the sort. But they also likely have a sense of urgency to adapt to the AI age or run the risk of being outpaced by competitors more effectively harnessing the full power of generative AI technologies. Given this, Salesforce looks very well positioned as AI software looks to take the corporate world by storm.

The company’s Einstein GPT tailors the incredibly popular large language model ChatGPT for customer relationship management. With tight integration across the Salesforce (and Slack) ecosystem, Salesforce stands out as a potentially sizeable beneficiary as AI and chatbots become more capable with time.

On the date of publication, Joey Frenette owned shares of Microsoft, Alphabet (Class C) and Salesforce. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.