Alphabet’s US$100 billion stock swoon shows AI stakes are rising
- Alphabet’s sell-off continued on Thursday with a drop of as much as 5.1 per cent, on track for the worst two-day decline since March 2020
- Until this week, speculation surrounding AI in the US had been mostly limited to Nvidia, and more obscure software firms with AI in their names
The stakes in the race for generative artificial intelligence (AI) are rising.
The fervour in the stock market bubbling around AI spread this week to Microsoft Corp and Alphabet, which have so far been ignored by traders despite these firms' heavy investment in the technology.
Google parent Alphabet’s shares tumbled 7.7 per cent on Wednesday after concerns surfaced about the competency of Bard, the ChatGPT rival it unveiled on February 6. The sell-off continued on Thursday with a drop of as much as 5.1 per cent, on track for the worst two-day decline since March 2020. The rout has erased about US$170 billion in market value.
The sell-off, which was far bigger than the 2.8 per cent drop the day after Alphabet’s earnings missed estimates, shows how important success in the AI arms race has become for investors.
“For a stock like Google to get knocked down this much, it just shows you that people aren’t even looking at the fundamentals,” said Matt Maley, chief market strategist at Miller Tabak + Co.