Gemini

The frenzy over artificial intelligence (AI) stocks kicked off in late 2022 with the arrival of OpenAI’s ChatGPT. While this watershed moment occurred years ago, the AI market shows no sign of slowing down.

In fact, Google parent Alphabet (GOOGL -0.16%) (GOOG -0.04%) achieved a recent breakthrough with Gemini, a large language model (LLM) comparable to ChatGPT in many ways.  The innovation suggests the AI industry could enjoy prosperity for decades.

If so, now may be the time to invest in AI giants like Alphabet. Here’s a dive into the company’s artificial intelligence accomplishment, as well as the implications for Alphabet’s stock and the broader AI market.

Alphabet’s AI achievement

In September, Alphabet’s Gemini achieved a groundbreaking outcome, becoming the first AI model to win a gold medal in an international computer programming competition. It successfully solved complex, real-world calculations that stymied human participants.

Google DeepMind, Alphabet’s AI research division, was responsible for Gemini. The DeepMind team highlighted the significance of the landmark achievement by stating, “Solving complex tasks at these competitions requires deep abstract reasoning, creativity, the ability to synthesize novel solutions to problems never seen before, and a genuine spark of ingenuity.”

Gemini demonstrated these traits in the competition, including successfully coming up with a creative solution to one challenge that no human participant was able to solve. This result marked a crucial step on the path toward artificial general intelligence (AGI). AGI is a theoretical level of AI proficiency considered equivalent to human thinking.

Gemini’s milestone is a memorable bellwether, akin to the moment when the world was stunned by IBM’s Deep Blue computer beating the reigning human chess champion in 1997.

How Alphabet’s milestone impacts the AI industry

A quarter-century after Deep Blue’s achievement, OpenAI’s introduction of ChatGPT opened the floodgates for the current AI boom. Now, Gemini’s breakthrough signals the start of a new era in the evolution of artificial intelligence, as the tech edges closer to the capacity for original thought.

AI is evolving from simply completing specific tasks toward solving more complex problems that require leaps in thinking — for example, designing innovative microchips or coming up with new medicines. The possibilities to upend markets in the years to come could be akin to how today’s AI is delivering unprecedented transformation across industries.

One example is Nvidia, the semiconductor chip leader. AI systems require increasingly potent computing capabilities. This need led to the company’s impressive 56% year-over-year sales growth to $46.7 billion in its fiscal second quarter, ended July 27, and drove its stock to a $4 trillion market cap.

Alphabet was among the first to power its AI with Nvidia’s new Blackwell chips. When the chip debuted in 2024, Nvidia stated, “Blackwell has powerful implications for AI workloads” and that the tech would help “drive the world’s next big breakthroughs.” Following Gemini’s AI milestone, it appears that Nvidia’s words were something more than empty marketing boasts.

The computing power needed to produce the Gemini breakthrough must have been substantial. Alphabet declined to specify how much, but admitted it was more than what’s available to customers subscribing to its top-tier Google AI Ultra service for $250 per month. With that kind of computing capability required for AI to perform advanced reasoning, Nvidia and other hardware providers can continue to benefit from AI advances.

What the Gemini breakthrough means for Alphabet stock

While building toward artificial general intelligence will increase computing costs for Alphabet, the company can afford it. Thanks to its search engine dominance, Alphabet generates substantial free cash flow (FCF) to invest in its AI systems. The company produced $66.7 billion in FCF over the trailing 12 months through Q2.

In addition, AI is already delivering business growth for the company. Its second-quarter sales were up 14% year over year to $96.4 billion as customers adopted AI features Alphabet released onto its search engine, cloud computing services, and advertising platforms.

Despite these strengths and Gemini notching a significant AI victory, Alphabet shares remain reasonably valued compared to rivals such as Microsoft. This can be seen in the stock’s price-to-earnings (P/E) ratio, which reflects how much investors are willing to pay for each dollar of a company’s earnings, based on the trailing 12 months.

Data by YCharts.

The chart shows Alphabet’s P/E ratio is lower than Microsoft’s, suggesting it’s a better value. In other words, now could be a good time to pick up Alphabet shares at a reasonable price.

Since the Google parent isn’t the only beneficiary of ongoing AI progress, it’s worth considering the growth potential in other AI players, such as Nvidia, IBM, and Microsoft. As the tech industry moves closer to achieving AGI, the AI space is poised for innovations that are likely to fuel the sector’s growth for decades to come.

WASHINGTON — When President Trump’s administration last month awarded a contract worth up to $1.2 billion to build and operate what it says will become the nation’s largest immigration detention complex, it didn’t turn to a large government contractor or even a firm that specializes in private prisons.

Instead, it handed the project on a military base to Acquisition Logistics LLC, a small business that has no listed experience running a correction facility and had never won a federal contract worth more than $16 million. The company also lacks a functioning website and lists as its address a modest home in suburban Virginia owned by a 77-year-old retired Navy flight officer.

The mystery over the award only deepened last week as the new facility began to accept its first detainees. The Pentagon has refused to release the contract or explain why it selected Acquisition Logistics over a dozen other bidders to build the massive tent camp at Fort Bliss in west Texas. At least one competitor has filed a complaint.

The secretive — and brisk — contracting process is emblematic, experts said, of the government’s broader rush to fulfill the Republican president’s pledge to arrest and deport an estimated 10 million migrants living in the U.S. without permanent legal status. As part of that push, the government is turning increasingly to the military to handle tasks that had traditionally been left to civilian agencies.

A member of Congress who recently toured the camp said she was concerned that such a small and inexperienced firm had been entrusted to build and run a facility expected to house up to 5,000 migrants.

“It’s far too easy for standards to slip,” said Rep. Veronica Escobar, a Democrat whose district includes Fort Bliss. “Private facilities far too frequently operate with a profit margin in mind as opposed to a governmental facility.”

Attorney Joshua Schnell, who specializes in federal contracting law, said he was troubled that the Trump administration has provided so little information about the facility.

“The lack of transparency about this contract leads to legitimate questions about why the Army would award such a large contract to a company without a website or any other publicly available information demonstrating its ability to perform such a complicated project,” he said.

Ken A. Wagner, the president and CEO of Acquisition Logistics, did not respond to phone messages or emails. No one answered the door at his three-bedroom house listed as his company’s headquarters. Virginia records list Wagner as an owner of the business, though it’s unclear whether he might have partners.

Army declines to release contract

Defense Secretary Pete Hegseth approved using Fort Bliss for the new detention center, and the administration has hopes to build more at other bases. A spokesperson for the Army declined to discuss its deal with Acquisition Logistics or reveal details about the camp’s construction, citing the litigation over the company’s qualifications.

The Department of Homeland Security, which includes U.S. Immigration and Customs Enforcement, declined to answer questions about the detention camp it oversees.

Named Camp East Montana for the closest road, the facility is being built in the sand and scrub Chihuahuan Desert, where summertime temperatures can exceed 100 degrees Fahrenheit and heat-related deaths are common. The 60-acre site is near the U.S.-Mexico border and the El Paso International Airport, a key hub for deportation flights.

The camp has drawn comparisons to “Alligator Alcatraz,” a $245 million tent complex erected to hold ICE detainees in the Florida Everglades. That facility has been the subject of complaints about unsanitary conditions and lawsuits. A federal judge recently ordered that facility to be shut down.

The vast majority of the roughly 57,000 migrants detained by ICE are housed at private prisons operated by companies like Florida’s Geo Group and Tennessee-based CoreCivic. As those facilities fill up, ICE is also exploring temporary options at military bases in California, New York and Utah.

At Fort Bliss, construction began within days of the Army issuing the contract on July 18. Site work began months earlier, before Congress had passed Trump’s big tax and spending cuts bill, which includes a record $45 billion for immigration enforcement. The Defense Department announcement specified only that the Army was financing the initial $232 million for the first 1,000 beds at the complex.

Three white tents, each about 810 feet long, have been erected, according to satellite imagery examined by the Associated Press. A half dozen smaller buildings surround them.

Setareh Ghandehari, a spokesperson for the advocacy group Detention Watch, said the use of military bases hearkens back to World War II, when Japanese Americans were imprisoned at Army camps including Fort Bliss. She said military facilities are especially prone to abuse and neglect because families and loved ones have difficulty accessing them.

“Conditions at all detention facilities are inherently awful,” Ghandehari said. “But when there’s less access and oversight, it creates the potential for even more abuse.”

Company will be responsible for security

A June 9 solicitation notice for the Fort Bliss project specified the contractor will be responsible for building and operating the detention center, including providing security and medical care. The document also requires strict secrecy, ordering the contractor inform ICE to respond to any calls from members of Congress or the news media.

The bidding was open only to small firms such as Acquisition Logistics, which receives preferential status because it’s classified as a veteran and Hispanic-owned small disadvantaged business.

Though Trump’s administration has fought to ban diversity, equity and inclusion programs, federal contracting rules include set-asides for small businesses owned by women or minorities. For a firm to compete for such contracts, at least 51% of it must be owned by people belonging to a federally designated disadvantaged racial or ethnic group.

One of the losing bidders, Texas-based Gemini Tech Services, filed a protest challenging the award and the Army’s rushed construction timeline with the U.S. Government Accountability Office, Congress’ independent oversight arm that resolves such disputes.

Gemini alleges Acquisition Logistics lacks the experience, staffing and resources to perform the work, according to a person familiar with the complaint who wasn’t authorized to discuss the matter and spoke on the condition of anonymity. Acquisition Logistics’ past jobs include repairing small boats for the Air Force, providing information technology support to the Defense Department and building temporary offices to aid with immigration enforcement, federal records show.

Gemini and its lawyer didn’t respond to messages seeking comment.

A ruling by the GAO on whether to sustain, dismiss or require corrective action is not expected before November. A legal appeal is also pending with a U.S. federal court in Washington.

Schnell, the contracting lawyer, said Acquisitions Logistics may be working with a larger company. Geo Group Inc. and CoreCivic Corp., the nation’s biggest for-profit prison operators, have expressed interest in contracting with the Pentagon to house migrants.

In an earnings call this month, Geo Group CEO George Zoley said his company had teamed up with an established Pentagon contractor. Zoley didn’t name the company, and Geo Group didn’t respond to repeated requests asking with whom it had partnered.

A spokesperson for CoreCivic said it wasn’t partnering with Acquisition Logistics or Gemini.

Biesecker and Goodman write for the Associated Press. Goodman reported from Miami. AP writer Alan Suderman in Richmond, Va., and Morgan Lee in Santa Fe, N.M., contributed to this report.

LEAD ARTIST wore down Dancing Gemini in the final strides to deny Roger Teal a fairytale Lockinge win at Newbury.

Teal’s well-backed 2-1 favourite headed the eventual winner with a furlong to run, but the petrol tank began to empty and John Gosden’s runner got back up close home.

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It was heartbreak for nice guy Teal, who was seeking just his third Group 1 win, but he took it on the chin and is up for another crack at the winner.

There was promise, too, from Richard Hannon’s Classic winner Rosallion, who was a few lengths away in third on his first run for nearly a year.

But it was Gosden who had the last laugh, winning a Group 1 just 10 days after sacking Kieran Shoemark as his stable jockey.

He will no doubt feel his decision has been vindicated after Oisin Murphy steered home 17-2 shot Lead Artist by a neck, a result Gosden admitted he didn’t see coming.

He said: “It was a very strong Lockinge and if you’d asked me beforehand I’d have said we’d be in the first three, I didn’t expect him to win.

“He is a lovely horse and he’s won over nine furlongs before, so Ryan came at us from off the pace and used up petrol and we’ve just been able to get back past him.

“We’ll go to the Queen Anne at Royal Ascot now where I expect we’ll meet several of these horses again, and it should be a hell of a race.”

Dancing Gemini will definitely be there, and Teal said he won’t duck and dive his way through the season with his stable star.

The Lambourn trainer said last month he wanted to emulate last season’s top miler Charyn, and so far the four-year-old is sticking to the script.

Teal said: “We said we were going to try and do a Charyn and he was second in the Lockinge last year, so it’s not the end of the world. We’ve run better than Charyn did, he ran great.

“Ryan said the ground was probably a bit lively for him, it was the quickest ground he’s been on.

“We don’t duck and dive, we’ve only gone down a neck and he has put the rest of the field to bed so we’ll go to the Queen Anne now.

“It was a bit of an awkward draw, we had to take him back further than we wanted to. He’s gone down on his sword and he’s a Group 1 winner waiting to happen.”

Hannon was a bag of nerves before Rosallion’s long overdue return to action, but he was pleased with the colt after such a long lay-off.

He said: “It was a very good run, he was pretty fit coming here but there is nothing like race fitness.

“I’ve no doubt he’ll improve loads for that, so we will go again and head to Ascot.”