Shares of Google parent Alphabet plunged nearly 8% on Wednesday, eroding $100 billion in market value after its new artificial intelligence chatbot shared inaccurate information in a promotional video. The stock price got hammered amid concerns the search and advertising giant may lose ground to rival Microsoft Corp in the search-engine market, which is Alphabet’s main source of earning. Google launched the AI-equipped chatbot Bard on February 7.
In the past one year, Alphabet stock has plunged 30%, while it dropped 15% in six month period. The stock, however, rebounded nearly 13% in a month even after it reported disappointing earnings in the fourth quarter ended December as advertisers cut spending amid recession concerns. As part of cost-cutting measure, the company recently fired around 12,000 employees in one of the highest headcount reductions in the past year.
On Wednesday, Alphabet stock opened lower at $102.05 per share against the previous closing price of $107.64 on the NASDAQ. During the session, the tech stock declined as much as 8.9% to hit an intraday low of $98.04 amid strong volume, which touched nearly three times the 50-day moving average. The share finally settled 7.68% lower at $99.37, erasing more than $100 billion in market capitalisation.
The sell-off in the company’s shares was triggered after Reuters pointed out an error in Google's advertisement hours before Bard’s launch event in Paris. In the Twitter post, a GIF image displays a user asking Bard, “What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year-old about?”—to which the chatbot responded, saying that the JWST took the very first pictures of a planet outside of our own solar system. This is not true.
Google launched its AI-based chatbot Bard to keep pace with Open AI's popular language model ChatGPT-3 as it is in no mood to give up on its search engine ‘crown’ so easily. The development can be seen in the context of ground-breaking developments in the text-generative AI space in recent months, with Microsoft-backed OpenAI leading the chart by gaining popularity among developers, researchers, and businesses. The popularity of newcomer AI systems like ChatGPT and DALL-E has already put Google on the back foot as despite working in the AI space for years, it has not released any sophisticated tools like these.
The Bard rollout comes just days after Alphabet CEO Sundar Pichai said the company will soon come up with big language AI-powered models, which will work as a "champion to search”. Brad is a new experimental conversational GoogleAI service, which is powered by LaMDA. LaMDA (Language Model for Dialogue Applications) is a powerful AI model that Google first released in May 2021. It works on similar technology as ChatGPT.
Google announcements on the AI front also assume significance after the recent moves by another tech giant Microsoft, which announced a "multiyear, multibillion-dollar investment (around $10 billion)" in ChatGPT owner OpenAI in January 2023 as it looks to commercialise the advanced AI tech across its consumer and enterprise products. Before that, in 2019 and 2021, Microsoft had infused more than $1 billion in the startup.
Interestingly, soon after Google's announcement, Microsoft on Tuesday announced it would launch a new version of its search engine, Bing, utilising the same technology underpinning ChatGPT to help inform user search queries. Despite its worldwide popularity, however, experts have advised caution against relying too much on chatbots like ChatGPT, primarily because of their inability to update the latest information.