Alphabet's Bard AI Misfires in Debut, Shares Swoon

Google parent loses $100B in market cap as Microsoft also rolled out AI-assisted search

By
Igor Greenwald
Igor Greenwald
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Igor is an experienced finance journalist. He has covered U.S. and global financial markets, business, and economics as an editor and columnist for more than two decades.
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Published February 08, 2023
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An early skirmish in the race for artificial intelligence supremacy had Alphabet (GOOG, GOOGL) shares down about 8% in afternoon trading Wednesday, wiping out almost $100 billion in market cap after a demonstration of its AI-powered chat interface Bard showed off the technology's flaws of making plausible-sounding misstatements.

Key Takeaways

  • Alphabet shares fell 8% Wednesday after the company and rival Microsoft unveiled AI-assisted search features this week.
  • Alphabet's AI chatbot Bard made a factual error in its first public demonstration.
  • Microsoft recently invested an additional $10 billion in OpenAI, whose popular ChatGPT makes mistakes as well.
  • Artificial intelligence technology has been called "the next big thing" and related stocks have posted big gains recently.

Alphabet CEO Sundar Pichai unveiled Bard late Monday, calling it "the most profound technology we're working on today."

The demonstration showed the chatbot's answer to a question about new James Webb Space Telescope (JWST) discoveries that one could discuss with a 9-year old. Bard credited JWST with taking "the very first pictures of a planet outside of our solar system." By Tuesday, Twitter users were noting that the first exoplanet was imaged by the European Southern Observatory in Chile in 2004.

Google stock price chart

YCharts

OpenAI's popular AI chatbot ChatGPT, which fueled the recent conversation around AI, has also told a whopper or two in its time. The large language models both ChatGPT and Bard deploy to sound convincingly human are geared to showcase fluency, not factual or logical rigor.

However, that hasn't stopped tech mega caps from tripping over each other to highlight their grasp of the technology. A day after Bard's launch, Microsoft (MSFT) announced it would augment its Bing search engine with AI features from its partner OpenAI.Coming off a costly earnings miss, Intel (INTC) discussed "unlocking the potential of generative AI" in an editorial published Wednesday. Microsoft recently announced a $10 billion investment in OpenAI, making Microsoft's Azure OpenAI's exclusive cloud computing provider.

But Alphabet potentially has more at stake in the race to develop a technology capable of replacing online searches with reliable and relevant answers. Google search advertising is the company's primary moneymaker, while Bing is far from raking in big bucks for Microsoft.

The AI boom could benefit chip maker Nvidia (NVDA) in the long term, Wedbush analysts said in a research note Wednesday. "We see the inclusion of additional AI capabilities into search as driving incremental longer-term demand for hardware," they wrote. "Most notably there will need to be incremental accelerators to meet increased AI requirements for search (a result that is a significant longer-term positive for NVDA which continues to dominate the AI market), but also incremental storage, memory, etc. will be required to support the uptick in AI needs."

In the meantime, visitors to the ChatGPT site Wednesday were intermittently informed that "ChatGPT is at capacity right now."

Article Sources
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  3. Grant Tremblay on Twitter. "Not to Be a...."

  4. Bruce Macintosh on Twitter. "Speaking as Someone Who Imaged...."

  5. Analytics India Magazine. "Freaky ChatGPT Fails That Caught Our Eyes."

  6. Microsoft. "Reinventing Search With a New AI-Powered Microsoft Bing and Edge, Your Copilot for the Web."

  7. Search Engine Journal. "Google’s New AI-Powered Features: Search Just Got Smarter."

  8. Intel. "Intel Editorial: Unlocking the Potential of Generative AI."

  9. Microsoft. "Microsoft and OpenAI Extend Partnership."

  10. Bloomberg. "Microsoft Invests $10 Billion in ChatGPT Maker OpenAI."

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  12. Alphabet. "Alphabet Announces Fourth Quarter and Fiscal Year 2022 Results."

  13. ChatGPT. "ChatGPT is at capacity right now."

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