Investors and traders alike are being taken off guard by the action in Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) stock today. At Wednesday’s low, GOOGL stock was down an astounding 8.9%. So far, there hasn’t been much of a bounce, with shares still down about 7% on the day.
This move is quite surprising, given that Alphabet stock hit its highest level since mid-September on Tuesday. To say Alphabet’s decline caught investors off guard seems like an understatement.
Artificial intelligence (AI) has been all the talk over the last few days. That’s also been the case for Big Tech and with Alphabet specifically.
The company recently announced a new AI-powered chatbot called Bard. According to Google:
“Bard seeks to combine the breadth of the world’s knowledge with the power, intelligence and creativity of our large language models. It draws on information from the web to provide fresh, high-quality responses.”
While that does seem exciting, the product’s reception has not gone to plan. For one, the company has already put out an ad for Bard with incorrect information. That has left investors and AI fans to wonder just how good Bard really is.
The AI Race and GOOGL Stock
The AI race is really beginning to heat up. That much is clear as we see stocks like C3.ai (NYSE:AI), Nvidia (NASDAQ:NVDA) and others explode higher.
ChatGPT went mainstream a few months ago, garnering 1 million users in just five days. It has swept across the world and drawn a ton of interest from both users and companies.
Not long ago, Microsoft (NASDAQ:MSFT) made a multi-billion investment in OpenAI, the company behind ChatGPT. On Tuesday, Microsoft also held an event about how it is incorporating AI into its search to better compete with Google.
Many investors are likely looking at the action in GOOGL stock and concluding that it’s silly for shares to be down so much. That’s a reasonable take. However, the fear isn’t about business today, it’s about business tomorrow.
It doesn’t seem like a coincidence that all sorts of tech companies big and small are rushing into the AI spotlight. They are trying to push out chat products and AI-based search platforms in a “look at us, we’re doing AI, too” type of fashion.
That’s not to say they don’t have merit. But it all feels like they’re chasing and trying to catch up. The fear with Google is that the company is really trying to play catch up as well.
That may not be the reality, but it is what some investors are worried about. Even if there’s a slim chance that Google’s search market share gets eaten into, the risk now feels larger than it ever has. This helps explain today’s dip in GOOGL stock.
On the date of publication, Bret Kenwell did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.