Alphabet shares dive after Google’s chatbot gives incorrect answer
Alphabet Inc lost $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video and a company event failed to dazzle, feeding worries that the Google parent is losing ground to rival Microsoft Corp.
Alphabet shares slid as much as nine percent during regular trading, with volumes nearly three times the 50-day moving average. They pared losses after hours and were roughly flat. The stock had lost 40 percent of its value last year but rallied 15 percent since the beginning of this year, excluding Wednesday’s losses.
Reuters was first to point out an error in Google’s advertisement for chatbot Bard, which debuted on Monday, about which satellite first took pictures of a planet outside the Earth’s solar system.
Alphabet posted a short GIF video of Bard in action via Twitter, promising it would help simplify complex topics, but it instead delivered an inaccurate answer.
In the advertisement, Bard is given the prompt: “What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year old about?” Bard responds with a number of answers, including one suggesting the JWST was used to take the very first pictures of a planet outside the Earth’s solar system, or exoplanets. The first pictures of exoplanets were, however, taken by the European Southern Observatory’s Very Large Telescope (VLT) in 2004, as confirmed by NASA.
Bard’s error was discovered just before the presentation by Google.
“This highlights the importance of a rigorous testing process, something that we’re kicking off this week with our Trusted Tester program,” a Google spokesperson said. “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.”
Google has been on its heels after OpenAI, a start-up Microsoft is backing with around $10 billion, introduced software in November that has wowed consumers and become a fixation in Silicon Valley circles for its surprisingly accurate and well-written answers to simple prompts.
Google did not say how and when it would integrate Bard into its core search function.
A day earlier, Microsoft held an event touting that it had already released to the public a version of its Bing search with ChatGPT functions integrated.
“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,” said Gil Luria, senior software analyst at DA Davidson. “Google has been scrambling over the last few weeks to catch up on Search and that caused the announcement yesterday (Tuesday) to be rushed and the embarrassing mess up of posting a wrong answer during their demo.”
The search and advertising giant is moving quickly to keep pace with OpenAI and rivals, reportedly bringing in founders Sergey Brin and Larry Page to accelerate its efforts.
The new ChatGPT software has injected excitement into technology firms after tens of thousands of job cuts in recent weeks and executive pledges to pare back on so-called moonshot projects. AI has become a fixation for tech executives who have mentioned it as much as six times more often on recent earnings calls than in prior quarters, Reuters found.
At the same time, Chinese state media has cautioned against risks in chasing local ChatGPT-concept stocks, while domestic AI companies urged investors to be rational after their soaring share prices caught regulators’ attention.
Frenzy around the technology has seen shares of Beijing Haitian Ruisheng Science Technology Ltd soar 217 percent this year.
Hanwang Technology Co Ltd risen as much as 129 percent as of Wednesday, CloudWalk Technology Co Ltd 128 percent and TRS Information Technology Co Ltd 66 percent.
In a front-page editorial, the Securities Times highlighted several technological concepts that previously spurred stock buying in China – such as fifth-generation telecommunications networks (5G), augmented reality (AR), virtual reality (VR) and anti-virus garments –the excitement for which has died down.
Companies developing ChatGPT-like concepts have also flagged risks at the request of regulators after their prices shot up amid intense interest in generative AI – technology that can generate new data and media such as text and images.
Beijing Haitian Ruisheng Science Technology said its ChatGPT-style products and services do not yet generate revenue.
By Martin Coulter and Greg Bensinger. Additional reporting by Samuel Shen, Jason Xue and Brenda Goh
“People are starting to question – Is Microsoft going to be a formidable competitor now against Google’s really bread-and-butter business,” said King Lip, chief strategist at Baker Avenue Wealth Management.
Lip cautioned, though, that concerns about Alphabet may be overblown, saying: “I think still Bing is a far, far cry away from Google’s search capabilities.”
Speed of growth
Though such technology “is on a long-term uptrend, we need to analyse its speed of growth, and effect, in a cool-headed way,” it said in a filing in response to queries from the Shanghai Stock Exchange.
The company said it expects a roughly 50 percent slump in 2022 net profit, and admonished investors to be cautious as its valuation is currently much higher than the industry average.
360 Security Technology Co Inc, in response to regulators’ queries, said its self-developed ChatGPT-related technology is still at a nascent stage and is used only internally as a productivity tool.
It is uncertain about when it can market ChatGPT-style products, and how effective they will be, so “we advise investors to pay attention to market trading risks, decide rationally, and invest cautiously.”
Among deep-pocketed Chinese firms joining the latest chatbot race, e-commerce leader Alibaba Group Holding Ltd, on Wednesday said it is developing a ChatGPT-style tool, while rival JD.com Inc said it aims to integrate ChatGPT-like technology into some products.
Gaming major NetEase Inc, plans to deploy similar “large language model” technology in its education business, a person familiar with the matter told Reuters.