Google’s new AI chatbot Bard gave the wrong answer to a query yesterday, causing its parent company Alphabet’s stock to plummet 8 percent and its market value to shrink by more than $100 billion. This may further raise questions about the search engine and the accuracy of using AI to answer human questions.
In a demonstration of how the Bard works, users type in a search query, “What new discoveries from the James Webb Space Telescope can I tell my 9-year-old about?” The NASA telescope, which became operational in December 2021, has been used by scientists to discover several new planets outside our solar system.
Bard gave many answers, one of which was that the James Webb telescope had taken the first pictures of planets outside our solar system. However, this statement is inaccurate because the first photos of exoplanets were taken by the European Southern Observatory’s Very Large Telescope (VLT) in 2004. The exoplanet, called 2M1207b, is about five times the size of Jupiter and is about 170 light-years from Earth.
After the error was discovered, Alphabet’s shares fell nearly 9 percent in midday trading before falling back somewhat. Yesterday, Alphabet’s share price peaked at $98.03 per share, down 8.1 percent from $106.77 the day before. It was the biggest one-day drop in Alphabet’s market value since October 2022, when the company lost 9 percent of its market value in one day after announcing a sharp slowdown in revenue, profit and growth.
A Google spokesperson said, “This underscores the importance of a rigorous testing process and is part of our Trusted Tester program, which we launched this week. We will combine external feedback with internal testing to ensure that Bard’s responses meet higher standards for quality, security and truthful information.”
Gil Luria, senior software analyst at D.A. Davidson, said, “While Google has been a consistent leader in AI innovation over the past few years, they seem to have fallen asleep at the wheel when it comes to applying the technology to their search products. In the past few weeks, Google has been busy playing catch-up with its competitors, which has led to embarrassingly rushed releases of its products and wrong answers given during demos.”
Alphabet’s fourth-quarter results were disappointing as advertisers cut spending. The search and advertising giant is moving quickly to keep pace with OpenAI and other competitors. But King Lip, chief strategist at Baker Avenue Wealth Management, which owns shares of both Alphabet and Microsoft, said, “People are starting to question whether Microsoft will now become a strong competitor to Google’s main business.” Lip warned, however, that concerns about Alphabet may be overstated. He said, “I think the new Bing is still a far cry from Google’s search capabilities.”
However, Jefferies analyst Brent Thill wrote in a research note to investors, “The search improvements will act as a thrust to long-term ad revenue, but it will take time to draw users back to Bing, and they will need crowbars to pry away the loyalty of Google advertisers. We see these updates as the tip of the iceberg of Microsoft’s AI capabilities, with the greatest opportunity in enterprise use cases.”
Analysts at Evercore said there was “little incremental news” from Google’s campaign, which may have contributed to the stock’s decline. Analysts said they saw it as a “premature and perhaps rushed outlook” for AI, which Google has been working on for years. Even so, the analysts said they believe Google’s AI technology is “at least as good as its competitors. “Years of AI investment and unparalleled scale should help Google defend its market dominance in the long term,” they wrote in the research note.
The new ChatGPT software breathes new life into tech companies after tens of thousands of layoffs in recent weeks and tech executives pledged to cut back on so-called “moonshot projects. A Reuters survey found that AI has become the new object of obsession for tech executives, who mentioned it six times more often in recent earnings calls than in previous quarters.
The appeal of AI search is that it can display search results in plain language, rather than as a list of links, which could make browsing faster and more efficient. It’s unclear what impact this might have on targeted advertising, which is a revenue pillar for search engines like Google.
Chatbot AI systems also pose a risk to companies because of the inherent biases in their algorithms, which could skew results and generate harmful content. For example, Microsoft released a chatbot on Twitter in 2016 that generated content on racial discrimination before it was shut down. The news site CNET used AI which was found to be plagiarized and falsified.
