Alphabet (GOOG, GOOGL) shares are down today about 3% amid mounting concerns about the Google parent's ability to compete in the AI arms race.
Search has been at the center of Google's business for more than two decades and, in the past, Google's AI credibility would have been hard to question. However, the company has struggled over the last few months to prove that it has what it takes to move AI search into its future — and subsequently people are beginning to take competing search engines more seriously.
On Sunday, The New York Times reported that Google is looking to make "radical" changes to its search offerings, facilitated by the news that major companies like Samsung are considering switching to Microsoft's new version of Bing.
There is, of course, still a long way to go for Bing to hit the heights of Google Search, which still processes billions of searches each day. However, investors keep asking – and today's stock drop is the latest iteration of this – why it seems like they're falling behind.
It's a question that Needham analyst Laura Martin has been asking for months, most recently in an April 3 note: "The hardest question we get from investors is: How could any company launch a consumer-facing AI product before GOOGL, given its AI lead? GOOGL has about 130,000 FTEs, 30,000 software engineers globally, and 10,000 AI engineers making an average of $200,000 each, according to Glassdoor ... How did OpenAI get the jump on GOOGL with its ChatGPT product?"
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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