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Alphabet experiences second largest daily market cap loss ever

Shares of Alphabet came under massive selling pressure as the company has failed to impress investors with its newest AI edition.

The race for the most used AI has begun

Alphabet’s Google announced on Wednesday that it would boost search results using generative AI capabilities, in its latest blow at Microsoft, which unveiled plans to upgrade its rival search engine Bing the previous day.

Microsoft hopes these new features will revitalize its Bing platform and enable it to challenge Google’s dominance in the internet search industry, which supports a $100 billion ad business. Google stated that adding generative AI to search results will generate text or visual replies to queries and allow users to engage with information in “completely new ways.”

AI error costs Google billions of dollars

Google launched an online commercial in which their highly anticipated AI chatbot, Bard, provided an incorrect response. The tech giant uploaded a brief GIF video of Bard in work on Twitter, characterizing the chatbot as a “launchpad for inquiry” that simplifies complicated themes.

In the advertisement, Bard is asked, “What new findings from the James Webb Space Telescope (JWST) can I discuss with my nine-year-old?”

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Bard responds with a variety of explanations, one of which is that the JWST was used to capture the first images of extrasolar planets or exoplanets. This is incorrect.

The issue was discovered hours before Google sponsored a launch event for Bard in Paris, where senior executive Prabhakar Raghavan introduced Bard as the company’s future, telling the audience that using generative AI, “the only limit to your search will be your creativity.”

Google was prompted to issue a statement regarding the share price decline, stating that Bard’s response “highlights the necessity of a robust testing procedure.”

The business stated that it will mix external input with internal testing to guarantee that Bard’s solutions “meet a high standard for quality, safety, and real-world relevance.”

The market valuation of Alphabet has been reduced by nearly $110 billion due to today’s decline.

The stock price dropped back below the 200-day moving average (the blue line) in what appears to be a bearish reversal. The next target for bears could be near $95.50, while the immediate resistance will likely be at the psychological level of $100.

Alphabet daily chart

Alphabet daily chart, source: author´s analysis, tradingview.com

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