Google parent Alphabet loses $100bn market value after AI chatbot Bard makes error in ad

Google’s parent Alphabet has lost $100 billion in market value on Wednesday after its new artificial intelligence (AI) chatbot Bard shared inaccurate information in a promotional video. This has also raised concerns among analysts if Google is losing its AI battle to rival Microsoft-backed, OpenAI-created ChatGPT, which has amassed a huge user base in a short time.   

In an advertisement for Bard, the bot is asked: "What new discoveries from the James Webb Space Telescope can I tell my 9-year-old about?"  

A number of answers are given, including one where Bard responds with a suggestions that the JWST was used to take the very first pictures of a planet outside the Earth's solar system, or exoplanets.  

However NASA has confirmed the first pictures of exoplanets were taken by the European Southern Observatory's Very Large Telescope in 2004.  

A Google spokesperson said that the ad error highlighted the "importance of a rigorous testing process, something that we're kicking off this week with our Trusted Tester program."   

"We'll combine external feedback with our own internal testing to make sure Bard's responses meet a high bar for quality, safety and groundedness in real-world information," the spokesperson told Reuters.   

Alphabet shares slid as much as 9% during regular trading with volumes nearly three times the 50-day moving average. The drop reportedly marked the steepest one-day decline since October 2022, when an Alphabet earnings report disclosed a slowdown in digital ad revenue causing a major concern among investors. Those concerns have escalated since another report released last week revealed Google’s ad sales during the holiday season quarter fell from the same time in the previous year.  

Also, Google's live-streamed presentation on Wednesday did not include details about how and when it would integrate Bard into its core search function. A day earlier, Microsoft held an event touting that it had already released to the public a version of its Bing search with ChatGPT functions integrated. Post the event, Microsoft shares were up 0.5% after the announcement.   

“Google has been scrambling over the last few weeks to catch up on search and that caused the announcement yesterday to be rushed and the embarrassing mess up of posting a wrong answer during their demo,” Gil Luria, senior software analyst at DA Davidson, an investment bank told Reuters.  

However some analysts also noted that even though ChatGPT has attracted millions of users since its release in November last year by OpenAI, it still makes glaring mistakes that would be mocked if they showed up in Google's search results.   

“It's not like this is the end of the world for Google and Microsoft is going to eat its lunch in search,” Center for Financial Research and Analysis (CFRA) analyst Angelo Zino said at the event.  

Google has been focusing on artificial intelligence for the past six years, but has been cautious about how it uses the technology in its search engine that holds a roughly 90% share of the internet market — in part because it's counted on as a go-to source for reliable information,  Zino mentioned.  

Last month, Alphabet cut 12,000 jobs — about 6% of its workforce worldwide — amid layoffs at a number of leading tech giants.