Alphabet, Google’s Parent Company, Sees $90 Billion Market Value Drop
Alphabet Inc., the umbrella corporation encompassing tech giant Google, faced a substantial decline of approximately $90 billion in market value on Monday, spurred by mounting apprehensions surrounding the company’s generative artificial intelligence (AI) product.
The turmoil surrounding Google’s Gemini AI service has cast a shadow over Alphabet, exerting a notable impact on its stock performance on Wall Street.
Shares of Alphabet (GOOGL) witnessed a significant plummet of 4.5%, concluding at $138.75 on Monday, marking its lowest price since January 5 and representing the second-largest daily loss over the past year, as reported by Forbes.
This downturn comes on the heels of a series of issues linked to Google’s Gemini AI service, including the generation of racially inaccurate images of historical figures and a chatbot’s failure to discern the more negatively impactful historical figure between Adolf Hitler and Elon Musk.
In response to these concerns, Google conceded that it had “missed the mark” in the initial rollout of Gemini, subsequently taking its AI image service offline for the upcoming weeks.
Alphabet’s market value descent unfolded amidst the backdrop of relatively steady major stock indexes, positioning it as the most significant percentage drop among S&P 500 constituents with a market capitalization surpassing $50 billion.
Deeper Analysis
Worries loom over Google’s brand reputation, particularly if it is perceived as an unreliable source for AI. Such perceptions could potentially tarnish the company’s standing among a segment of the population.
Moreover, there are indications that Alphabet’s recent embroilment in cultural debates, fueled by controversies related to AI bias, might pose a challenge to its dominant position in the online search market.
As AI assumes an increasingly pivotal role in online search functionalities, speculations abound that user apprehensions about Google’s biases and hallucinations could undermine the company’s stature. The apparent bias of Gemini adds to Alphabet’s struggles in the AI competition, with Microsoft emerging as a formidable rival.
Alphabet’s AI missteps have become a recurring theme, with the company famously witnessing over $100 billion in market capitalization loss last February upon the announcement of its AI chatbot service. The announcement, riddled with factual errors from the service, contributed to a significant downturn in market value.
