Google Stock Dips with Gemini AI Search Backlash

Google lost 4.4% of its market cap this week after its CEO apologised for its searches on AI tool Gemini.

GOOG – Daily Chart

GOOG – Daily Chart

GOOG trades at the $138 level, and support is there, with lower targets at $128.

Google’s parent company, Alphabet, lost more than $70 billion in market value in one trading day after its AI chatbot’s image search problems renewed fears among investors about AI products.

Alphabet shares sank 4.4% to $138.75 on Monday before recovering slightly later.

The big hit for Google came after it was forced to pause its Gemini chatbot’s image creation tool, which was delivering factually and historically inaccurate images such as Black Vikings, “diverse” versions of America’s Founding Fathers, and inappropriate images related to Germany in World War II.

The chatbot’s bizarre behaviour appears to have been pre-programmed with diversity, and that rattled investors just days after Google released its new Gemini tool with much fanfare and asked for premium subscriptions of up to $30 per month for enterprises.

CEO Sundar Pichai acknowledged the issue: “I know that some of its responses have offended our users and shown bias – to be clear, that’s completely unacceptable and we got it wrong.”

He emphasised that Google has already improved the AI tool: “Our teams have been working around the clock to address these issues. We’re already seeing substantial improvement on many prompts.”

Google confirmed in a blog post that it was on top of the issue.

“Our teams have been working around the clock to address these issues. We’re already seeing a substantial improvement on a wide range of prompts. No AI is perfect, especially at this emerging stage of the industry’s development, but we know the bar is high for us and we will keep at it for however long it takes. And we’ll review what happened and make sure we fix it at scale”.

Despite the reassurance, Alphabet stock is now in the firing line, and it is another knock to the reputation of artificial intelligence tools and their accuracy.

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