Alphabet, the parent company of Google, plummeted by around $90 billion on Monday, triggered by mounting concerns surrounding the company’s generative artificial intelligence (AI) product.
The controversy surrounding Google’s Gemini AI service has cast a shadow over Alphabet, impacting its stock performance on Wall Street.
Alphabet’s stock (GOOGL) experienced a substantial 4.5% decline, closing at $138.75 on Monday, marking its lowest price since January 5 and marking the second-largest daily loss over the past year, Forbes first reported.
- This downturn follows a series of issues related to Google’s Gemini AI service, including the generation of racially inaccurate images of historical figures and a chatbot’s refusal to distinguish the more negatively impactful historical figure between Adolf Hitler and Elon Musk.
- In response to these concerns, Google acknowledged that it had “missed the mark” in the initial rollout of Gemini and consequently took its AI image service offline for the upcoming weeks.
- Alphabet’s market value decline occurred against the backdrop of relatively stable major stock indexes, making it the most significant percentage drop among S&P 500 constituents with a market capitalization exceeding $50 billion.
More insight
There are concerns over the brand reputation of Google particularly if it is perceived as an unreliable source for AI, it could adversely impact the company’s standing among a portion of the population.
Also, suggestions point to the fact that Alphabet’s recent entanglement in cultural debates, fueled by controversies related to AI bias, could potentially challenge its dominant position in the online search market.
As AI continues to play a growing role in online search functionalities, there are speculations that user concerns about Google’s biases and hallucinations could erode the company’s standing. Gemini’s apparent bias adds to Alphabet’s struggles in the AI competition, with Microsoft gaining prominence as a strong competitor.
Alphabet’s AI missteps have become a recurring theme, with the company famously losing over $100 billion in market capitalization last February on the day of the announcement of its AI chatbot service. The announcement included factual errors made by the service, contributing to a significant market value decline.
