Alphabet Inc (GOOGL.O) dropped $100 billion in market value on Wednesday after its new chatbot provided incorrect information in a promotional video and a business event failed to impress, fueling concerns that the Google parent is losing momentum to competitor Microsoft Corp. (MSFT.O).
During regular trading, Alphabet shares dropped as much as 9%, with volumes roughly three times the 50-day moving average. After hours, they reduced losses and were about flat. The stock lost 40% of its value in the previous year but has gained 15% since the start of this year, barring Wednesday's losses.
Reuters was the first to point out an inaccuracy in Google's advertisement for its new chatbot Bard, which premiered on Monday, regarding which satellite captured the first images of a planet outside the Earth's solar system.
OpenAI, a firm Microsoft is supporting with over $10 billion, unveiled software in November that has impressed users and become a Silicon Valley obsession with its unexpectedly accurate and well-written responses to simple prompts.
Wednesday morning's live-streamed presentation by Google lacked specifics regarding how and when the company would integrate Bard into its basic search function. Microsoft conducted an event the day before announcing that it has already released to the public a version of Bing featuring ChatGPT functionality.
Google, located in Mountain View, California, discovered Bard's blunder immediately prior to the presentation.
Gil Luria, a senior software analyst at D.A. Davidson, stated, "While Google has been a leader in AI innovation over the last several years, they seemed to have fallen asleep on implementing this technology into their search product." ."
Microsoft's stock increased almost 3% on Wednesday and remained unchanged in post-market trading.
Alphabet uploaded a brief GIF video showing Bard in action on Twitter with the promise that it would clarify complex concepts, but it, instead, provided an inaccurate response.
In the advertisement, Bard is asked, "What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year old about?" Bard responds with a variety of answers, one of which is that the JWST was used to capture the first images of extrasolar planets, or exoplanets. NASA confirmed that the Very Large Telescope (VLT) of the European Southern Observatory captured the first images of exoplanets in 2004.
A Google spokeswoman stated, "This highlights the importance of a rigorous testing process, something that we’re kicking off this week with our Trusted Tester program. We’ll combine external feedback with our own internal testing to make sure Bard’s responses meet a high bar for quality, safety and groundedness in real-world information. "
Alphabet is coming off a dismal fourth quarter due to decreased spending for advertising.
The search and advertising behemoth is reportedly bringing in founders Sergey Brin and Larry Page to speed its attempts to keep up with OpenAI and rivals.
"People are starting to question is Microsoft going to be a formidable competitor now against Google’s really bread-and-butter business," according to King Lip, chief strategist at Baker Avenue Wealth Management, which holds Alphabet and Microsoft shares.
Lip emphasized, however, that concerns about Alphabet may be exaggerated, stating, "I think still Bing is a far, far cry away from Google’s search capabilities."
After tens of thousands of job layoffs in recent weeks and corporate pledges to scale back so-called moonshot projects, the new ChatGPT software has sparked excitement among technology corporations. Reuters discovered that AI has become an obsession for tech leaders, who have cited it six times more frequently on recent conference calls than in earlier quarters.
The allure of AI-driven search is that it might spit out results in plain language as opposed to a list of links, which could make surfing quicker and more efficient. Uncertain is the effect this may have on targeted advertising, the foundation of search engines like Google.
Chatbot AI systems pose hazards for organizations due to the inherent biases in their algorithms, which can skew results, sexualize images, and even commit plagiarism, as users who have tested the service have discovered. Microsoft, for example, developed a chatbot on Twitter in 2016 that began producing racist messages almost immediately before being taken down. In addition, it was discovered that an AI utilized by the news website CNET produced inaccurate or plagiarized articles.
At the time of writing, the Bard advertisement had been viewed over a million times on Twitter.
By fLEXI tEAM