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Tech giant Alphabet (GOOG -0.08%) (GOOGL -0.15%) dominates the search market with its Google search engine and is a powerhouse in streaming video with YouTube. In addition, its cloud division has carved out a solid third-place position in the cloud computing infrastructure market, recently becoming profitable. And the company is also investing in several "moonshot" projects, such as Waymo self-driving cars, which it groups into a segment called "other bets."

In short, Alphabet is a great business. Yet while the release of OpenAI's ChatGPT last year brought up competitive concerns, I would actually lean more toward Alphabet being in a stronger position a few years rather than a weaker one.

That's because of three innovations we already know are in its pipeline, not to mention others we might not even know about yet.

At the beginning of this year, some thought ChatGPT could put several of Alphabet's businesses in jeopardy. Notably, some wondered if a ChatGPT-enhanced Bing search engine would lure significant traffic away from Google, or if the answers generated by chatbots would be able as monetizable as traditional search queries.

While those questions are still out there, Google's share of the search business hasn't been affected much thus far. Moreover, Google's engineers were the ones who actually cracked the code on transformer technology, the architecture which allows AI models to train themselves without the need for human data labeling, and which has led to recent breakthroughs.

So Google should be able to compete in AI effectively. Earlier this year, the company combined its DeepMind and Google Brain AI laboratories into one unit. Now, the company is on the cusp of releasing its own large language model, Gemini, to take on OpenAI and others.

Gemini will attempt to take the best technologies under both DeepMind and Google Brain and combine them in a multimodal model. A multimodal model integrates not only text, but also images and other types of data. The version of ChatGPT you are probably familiar with is not multimodal; however, there are reports that OpenAI is working on a multimodal version of ChatGPT.

According to recent interviews with DeepMind CEO Demis Hassabis, Gemini will have innovative new reasoning, problem-solving, and reinforcement-learning capabilities, and will also be available in different sizes and capabilities for customers. Google is in the process of testing the model with a handful of outside developers, so Gemini should go into beta testing soon.

While we can't know how well Gemini will compete, Hassabis said early results were "promising." And Google not only has deep AI chops, but also unique computing infrastructure expertise from its many years of running Google Search. So, one can easily imagine a scenario in which Google leads the AI field with differentiated technology, just as it has long led search.

Three years from now, that could open up new revenue streams, including better search, a monetized chatbot, and/or more services on Google Cloud. Last quarter, Alphabet CEO Sundar Pichai noted that 70% of AI unicorns used Google Cloud. Meanwhile, the cloud unit could become a major profit center soon, as it just flipped to profitability for the first time in Q1 2023.

Image source: Getty Images.

Most people don't immediately think of Pixel phones and tablets as a core part of Alphabet's business, but the company has been improving its offerings and supporting the Pixel brand with more resources of late.

Results are starting to show. According to research firm Canalys, Google Pixel grew 20% in the first quarter, and reached 2.46% market share of Android phones in North America. That may not sound like much, but that made Pixel the third-most-used Android smartphone in North America. Meanwhile, second-place Motorola, which is now produced by Chinese company Lenovo, fell 40% in the first quarter, to a 4.82% market share.

That seems to indicate Google is gaining momentum in the phone market, as Motorola weakens and other Chinese smartphone brands exit the market. Furthermore, Korea's LG decided to stop making smartphones in 2021, leaving a bigger opening for Google to take market share.

And Pixel is doing even better in some overseas markets. For instance, Counterpoint Research reports that Pixel is now actually the leading Android brand in Japan, with a market share of about 9%.

Investors should also expect Pixel devices to get even better in the coming years. This is because the Pixel team is working on its own proprietary mobile system on a chip (SoC). Like many other mobile handset companies, Pixel started off using third-party hardware. However, Google has the financial resources to make Pixel's inner parts more proprietary, and it's now at work on a fully customized SoC.

The most recent Pixel smartphone actually uses some proprietary chip technology, but currently, Google is combining this with IP from Samsung's Exynos chipsets. However, Google is targeting the 2025 Pixel as the smartphone that will have a fully customized SoC. Given Google's success with in-house chipmaking for its tensor processing units (TPUs), which it uses in its cloud servers, the company could begin to make waves in the smartphone market a few years from now.

Finally, there was an interesting announcement made on Alphabet's last earnings call. CFO Ruth Porat, who has been in that role since 2015, announced she would be adding another title -- chief investment officer. More specifically, that new role will have her overseeing the "other bets" division, while also working with overseas policymakers to "unlock economic growth via technology and investment."

It's a bit unclear what that means, but Porat has been credited with helping Alphabet become more financially disciplined in recent years. And the "other bets" division could certainly use more discipline, as it lost $5.3 billion in 2021 and $6.1 billion in 2022.

With Porat now overseeing that division, it may see significant bottom-line improvements a few years from now, either through better revenue growth or perhaps cost savings from culling unprofitable projects.

Overall, Alphabet looks likely to be a steady earnings compounder for years to come. Meanwhile, it still trades at a reasonable valuation of around 20 times next year's earnings estimates -- and the stock is actually cheaper than that when factoring in Alphabet's $118 billion in cash and the depressive effect of its "other bets" losses.

Investors should look forward to more profitable growth from Alphabet over the next three years.

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Where Will Alphabet Be in 3 Years? - The Motley Fool