Topline
Shares of Alphabet slipped on Wednesday after reports that promotional material for the Google parent’s new artificial intelligence chatbot contained inaccurate information—adding to concerns that competitor Microsoft may expand its footing in the search-engine market with a buzzy new AI-equipped offering.
“AI is the most profound technology we are working on today,” Alphabet’s CEO said, as he announced … [+] the new chatbot this week.
Key Facts
Google shares fell nearly 8% to roughly $99.40 on Wednesday—erasing more than $100 billion in market value, including a nearly 5% uptick on Tuesday after the tech giant announced an AI-equipped service called Bard to compete with the popular ChatGPT bot.
The stock plunge worsened after Reuters reported Wednesday morning that a Twitter advertisement for the service, which generates answers for user queries and is debuting to a limited group of testers before a wider release, included inaccurate information.
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 service responds, saying the telescope “took the very first pictures of a planet outside of our own solar system.”
Despite the chatbot’s claim in the ad, NASA reports the first picture of a planet outside our solar system was taken by the Very Large Telescope in 2004—some 19 years before NASA’s Webb telescope.
“This highlights the importance of a rigorous testing process, something that we’re kicking off this week,” a Google spokesperson said in an email to Forbes, noting the testing process will combine external feedback with Alphabet’s own internal testing to make sure Bard’s responses “meet a high bar for quality, safety and groundedness in real-world information.”
Adding to potential concerns, Microsoft on Tuesday announced it would launch a new version of its search engine, Bing, utilizing the same technology underpinning ChatGPT to help inform user search queries—a move Wedbush analyst Dan Ives said should “challenge the Web search market by grabbing market share.”
Key Background
Artificial intelligence technology has drawn massive fanfare from investors this year amid the growing popularity of ChatGPT, which launched in November and has helped its maker, OpenAI, nab a staggering $29 billion valuation. Alphabet’s Bard announcement came one day before Microsoft held a press conference to tout an investment in OpenAI that has helped shares of the Silicon Valley staple surge nearly 20% over the past month. “This is just the first step on the AI front,” Ives told clients in a note after the event, reiterating an outperform rating for shares.
Contra
Despite the apparent flub, Bank of America analysts have said they’re bullish on Google’s AI strategy, writing in a note to clients that Google is “well prepared with years of investment” in the technology to capture a significant part of the market, particularly since its search engine has a large distribution advantage, as compared to Microsoft. Nevertheless, the analysts warn safety issues including result inaccuracy or bias, disinformation and the potential use of models for harm are key risks.
Crucial Quote
“AI is the most profound technology we are working on today,” Alphabet CEO Sundar Pichai said as he announced the new chatbot this week.
Further Reading
‘AI First’ To Last: How Google Fell Behind In The AI Boom (Forbes)
Bill Gates On Advising OpenAI, Microsoft And Why AI Is ‘The Hottest Topic Of 2023’ (Forbes)
Inside ChatGPT’s Breakout Moment And The Race To Put AI To Work (Forbes)
Read More
Alphabet Inc., the parent company of Google, has seen its stock drop by $100 billion over the weekend after a recently launched AI chatbot appeared to give users the wrong answer in an advertisement.
The chatbot, which was revealed earlier this month and is used to advertise Google products, gave users the wrong answer to a simple question when asked if one can use Google Home to control a television. The chatbot’s response, “No, Google Home does not work with televisions,” defied reality, as it is in fact possible to control many televisions with Google Home.
The misstep quickly drew widespread criticism, prompting Google to take action. The company immediately disabled the chatbot from appearing in any further advertisements, removed the advertisement from their website and Google Home pages, and released a statement apologizing for the error.
Alphabet Inc.’s market value dropped more than $100 billion on Monday and Tuesday, in large part due to the company’s highly publicized misstep. The company’s share price had hit an all-time high just days before the incident and analysts have noted that the stock plunge was a direct result of investor concerns over the incident.
In an attempt to regain public trust, Google has stated that they will be doing further testing and implementing more safeguards to prevent such errors from occurring in the future. They also made it clear that their AI chatbots are still in their early stages of development and that there may be additional mistakes in the future, but that Google is actively working to avoid such cases.
For now, Alphabet Inc.’s stock has not yet recovered, and analysts will be closely monitoring the company’s progress in the coming weeks to see if the public backlash will impact its share price in the long-term.
