What happened
Yesterday, Alphabet (GOOG -0.54%) (GOOGL -0.49%) gave everyone a glimpse of its Bard artificial intelligence (AI) technology, a competitor to OpenAI's ChatGPT, and investors have been so unenthused with what the company unveiled that they've driven Alphabet's stock down for two days straight.
The company's share price fell more than 7% yesterday and another 5.4% today, as of 2:40 p.m. ET, erasing an additional $60 billion off of the company's market cap.
So what
Alphabet held an AI event on Wednesday in which it showed off its Bard AI technology, a conversational search tool that the company wants to use to take on ChatGPT.
But in a demo for Bard, the chatbot gave a wrong answer when it said that the James Webb telescope took the very first pictures of exoplanets. NASA says the first images of exoplanets were captured by a telescope used by the European Southern Observatory back in 2004.
Bard's incorrect answer was a blow to Alphabet for two reasons. First, it showed that the company still has some work to do to get its AI right. And second, some people are viewing ChatGPT's AI as a threat to Alphabet's online search dominance, and Bard's wrong answer emphasized the fact that Alphabet isn't quite connecting the dots between conversational AI and search.
Now what
Alphabet's share price drop over the past two days has everything to do with who investors think is winning the AI wars right now.
Microsoft's stock rose yesterday after the company held its own AI event earlier in the week where it showed how OpenAI's ChatGPT will be integrated into its Edge web browser and its Bing search tool. ChatGPT has been extremely popular with online users and racked up more than 100 million active monthly users just two months after it debuted.
Microsoft was an early investor in OpenAI and is investing an additional $10 billion into the company as it integrates ChatGPT into its software and services. Microsoft said it will be rolling out its new Bing and Edge products to millions of users soon and has made both of them available to the public as a preview right now.
It's going to take some time before investors know who's winning the AI game between Microsoft and Alphabet, but it's been clear over the past two days that Alphabet has a lot further to go to convince investors that it's on the right track.
