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Alphabet Shares Tank By 7% After Google’s A.I. Event



Exterior of Google's London headquarters in Kings Cross-Alphabet Workers Union-ss-featured

The day after competitor Microsoft hosted its own event to showcase new AI technology in its rival search engine, Bing, shares of Alphabet, the parent company of Google, fell more than 7% as the firm highlighted its new artificial intelligence chatbot dubbed Bard.

On Monday, Google formally revealed Bard, confirming earlier reports from CNBC. The company also stated that it would start rolling out the technology soon.

Google executives talked about some of Bard’s capabilities during the event on Wednesday, which was live-streamed from Paris. The presentation demonstrated how Bard could be used, for instance, to outline the benefits and drawbacks of purchasing an electric automobile or to plot a journey to Northern California.

LaMDA, or Language Model for Dialogue Applications, is the company’s robust language model and powers Bard. Prior to making the chat technology more broadly accessible to the general public, Google will make it available to “trusted testers,” the company announced in a blog post on Monday.

A number of other Google products, including Maps and Google Lens, which enables users to search for images taken by their phone’s camera, also received AI advancements at the event.

During the event, Alphabet’s shares fell, indicating that investors were hoping for more given the increasing competition from Microsoft.

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The day after Google’s event, Microsoft held its own AI conference at its Redmond, Washington, headquarters. The focus of Microsoft’s event was on new AI-powered upgrades to its Edge browser and Bing search engine. Users will now be able to receive more conversational answers to their queries on Bing, which comes in a distant second to Google in terms of search.

Microsoft has invested billions in ChatGPT producer OpenAI, whose technology was used to build the updated Microsoft products.

AI software called ChatGPT creates text in response to intricately written commands. After its release in November, the web-based tool became widely known, leading analysts and Google staff to wonder whether the business was lagging behind in AI, an area that has been a key emphasis for Google for some time. As a result of ChatGPT’s success, Google issued an internal “code red” order to quicken the creation of Bard and other AI products. The company’s co-founders, Larry Page, and Sergey Brin, reportedly re-entered the fray after years of being absent from day-to-day operations.

Despite the pressure that Microsoft’s most recent AI initiatives are putting on Google search, some analysts believe it will be some time before Microsoft realizes any substantial advantages.

“Search improvements will act as a tailwind to [advertising revenue long term], but it will take time to bring users back to Bing and they will need a crowbar to pry away advertisers from Google,” Jefferies’ analyst Brent Thill wrote in a Tuesday note. “We view these updates as the tip of the iceberg for MSFT’s AI capabilities, with the largest opportunity in enterprise use cases.”

According to Evercore analysts, Google’s event provided “little incremental news,” which may have contributed to the stock price decline. The analysts claimed they thought this was a preliminary and “perhaps hurried” look at the artificial intelligence Google had been developing for years.

However, according to the analysts, Google’s AI technology is “at least as good” as that of its rivals.

“Leveraging its years of AI investment (which drove a near doubling of CapEx in 2018) and unparalleled scale, this should help the company defend its market position in the long run,” they wrote in a Wednesday note.

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