Google shares drop about 3% amid concerns over AI competitiveness

Finance


Alphabet shares (GOOG, GOOGL) are down about 3% today amid growing concerns about Google’s parent company’s ability to compete in the AI ​​arms race.

ChatGPT’s success has sparked a tech frenzy to put AI to good use, and Microsoft’s (MSFT) $10 billion stake in ChatGPT’s maker, OpenAI, is heating up even more. From Meta (META) to Amazon (AMZN), Big Tech’s other big names have taken their hats off to the ring. That said, the AI ​​race is particularly existential for Google.

Search has been at the heart of Google’s business for over 20 years, and in the past it’s been hard to question the credibility of Google’s AI. But the company has struggled over the past few months to prove it has what it takes to move AI search into the future, and since then people have started taking competing search engines more seriously. .

On Sunday, The New York Times reported that Google was about to make “fundamental” changes to its search service after news that big companies like Samsung were considering switching to Microsoft’s new version of Bing. I was.

The fact that it’s Samsung is especially important here.All Samsung phones run on the Android operating system (OS), and Android is still the most popular smartphone OS in the world, so there’s a lot of competition between Google and Samsung. Relationships matter. But the advantage is no small one because companies like Samsung are dedicated to Google’s technology.

It’s also not the first time Google’s stock price has fallen this year related to concerns about Google’s AI innovation and capabilities. In February, the stock fell in the aftermath of the company’s AI presentation, which was swamped by investors. The event comes a day after Microsoft unveiled his newly revived ChatGPT-integrated version of Bing, after which he surpassed his 100 million daily active users in March. After years of insignificance, Bing was back, and Google had to pay attention.

Of course, Bing still has a long way to go to reach the heights of Google Search, which processes billions of searches every day. But investors continue to ask – and today’s stock price drop is the latest repetition of this – why do they seem to be lagging behind.

That’s a question Needham analyst Laura Martin has been asking for months, most recently in an April 3 memo stating: According to Glassdoor, GOOGL has about 130,000 FTEs, worldwide he has 30,000 software engineers and 10,000 AI engineers, each earning an average of $200,000… How did you jump on GOOGL?”

Ally Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on her Twitter. @agarfinks and LinkedIn.

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