Investors love Google's answer to ChatGPT

• Alphabet stock surged 6.4% on Thursday following the roll-out of Gemini, its new AI tool.
• Wall Street appears impressed, fueling a rally that puts the stock on track for its best day since late August.
• Google executives said Gemini can outperform ChatGPT in some areas.

On Wednesday, Google introduced the world to Gemini, the tech giant's long-awaited answer to OpenAI's ChatGPT.

Wall Street appears to be impressed.

Shares of Google-parent Alphabet surged as high as 6.4% in Thursday trades, with investors cheering on what the company describes as its "most capable and general model yet." The stock was trading at $139.38 around 1 p.m. ET. and was on pace for its best day since late August. Alphabet's rise on Thursday helped pushed the Nasdaq up more than 1%.

Earlier reports pointed to a 2024 launch for Gemini, so Wednesday's announcement came earlier than anticipated. Still, Google won't launch its most powerful iteration, Gemini Ultra, until sometime next year.

Analysts at Wells Fargo cautioned that it remains to be seen what Google's monetization plan is for Gemini, but the launch ultimately remains a step in the right direction.

Bank of America, meanwhile, views the AI launch as a bullish sign.

"We think Google has strong AI capabilities, and data suggesting that Google has best in class, proprietary, AI capabilities can be positive for the shares in 1H′24," Bank of America strategists said Wednesday.

Initial reactions to Gemini have been largely positive, with many users reporting that it can keep pace with and even outpace some functions of OpenAI's most advanced model, GPT-4.

Users across X, formerly Twitter, quipped "Google is so back" in response to impressive demo videos of Gemini.

Tarek Khalil, a Google Cloud director who oversees the Middle East and North Africa, told Business Insider this week that the AI arms race is just getting started.

"I think the future is very bright for AI," Khalil said. "Specifically with the investments companies are doing now, not only on the tech side but also on the resource and partnerships side."

"Models are definitely going to skyrocket in the near future because there are a lot of engagements on that front — a lot of investments are being done not only from the tech provider, but also from the end user side and also from the partner side," he added.