Amazon Is Launching a Chatbot, and It’s Undercutting Microsoft and Alphabet

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It’s been a year since ChatGPT emerged on the scene. Since then, artificial intelligence (AI) has been a big theme in investing. Businesses have been eager to talk up their AI-powered products and services, regardless of how significant they are. AI is the new buzzword for companies to lure in customers and investors alike.

If you’ve been focusing on AI stocks, your attention may have been on NvidiaMicrosoft, or Alphabet. The latter two unveiled their own chatbots and have even rolled out products for their enterprise clients. But investors shouldn’t forget about Amazon (AMZN 1.41%). The company is no stranger to AI, and it recently announced its own chatbot.

Amazon Q to focus on businesses

Amazon recently unveiled its new AI-powered assistant, called Amazon Q. But unlike ChatGPT or Bard, this new chatbot is tailored toward businesses. There is no link or app that will allow people to easily test it out on their own to compare to those other chatbots.

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According to its website, “Amazon Q can be tailored to your business by connecting it to company data, information, and systems, made simple with more than 40 built-in connectors.” The chatbot can help ensure users only see information that they are allowed access to.

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It will be priced lower than Alphabet and Microsoft’s AI-powered services

Amazon is pricing the service out aggressively right at the start. At $20 per month, it’s cheaper than the $30/month that both Microsoft and Alphabet are charging for their AI-powered business applications, which focus on spreadsheet, word processing, email, and other productivity applications.

The services aren’t the same as what Amazon is offering, which appears to be a custom chatbot tailored for a specific business. But it may be a more useful service. For example, Amazon Q can work with Amazon Web Services to help a business develop a web application and get information about its supply chain. With Microsoft’s Copilot, one of the key features the company advertises is the ability to create a proposal based on meeting notes or helping to analyze trends or visuals in Microsoft Excel — something that intermediate-level Excel users would already know how to do.

While it’s still too early to tell how big of a benefit Microsoft Copilot may be to users, I don’t see anything there that’s much of a game changer, where at $30 per month, would offer more value for businesses than Amazon Q. Microsoft and Alphabet being the early movers into the space and offering AI-powered office applications and services may give them a head start, but I wouldn’t count on that leading to a sustainable advantage in the long run.

Could Amazon be the better AI stock to buy?

It’s still the very early innings of AI products and services making their way into the business world, and it’s far too early to call a winner. Businesses are the right type of customer to focus on, however, given the need for companies to become more efficient and do more with less, particularly at a time when costs are rising due to inflation.

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Investors should be careful not to assume that one AI stock will be a clear winner, as a lot can still change. Alphabet, for instance, hasn’t yet launched Google Gemini, which will be a more direct rival to ChatGPT. Apple is also working on a chatbot of its own.

Which AI product becomes the preference for a business may come down to which one safeguards data and privacy the best.

Amazon has been involved with AI for years (consumers only need to remember its personalized recommendations when shopping online as the easiest example of that), and it would be premature to say that it has fallen behind to Microsoft or Alphabet. This is still a long race, and any of these companies could come out on top. If you’re not sure which stock is the best option for your portfolio, you may want to spread your investment across any of the AI stocks mentioned here — these are all solid growth stocks to hold.

Should you invest $1,000 in Amazon right now?

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