All it took was a small error in astronomy to erase more than 150 billion dollars on the stock market.
The action of Alphabet, the parent company of Google, continued to fall on Thursday February 9 after a questionable performance by Bard, a new rival of the famous chatbot ChatGPT.
It fell 4% after collapsing 7.7% the day before.
A stock market crash due to a video posted by Google on February 7 on Twitter and supposed to demonstrate the prowess of its AI.
But Bard was wrong when he claimed that the James Webb Telescope was the first to take a picture of an exoplanet.
In reality, this feat had been achieved much earlier, in 2004, by a European telescope.
Bard is an experimental conversational AI service, powered by LaMDA.
Built using our large language models and drawing on information from the web, it's a launchpad for curiosity and can help simplify complex topics → https://t.co/fSp531xKy3 pic.twitter.com/JecHXVmt8l
— Google (@Google) February 6, 2023
Bard vs ChatGPT
The stock market reaction may seem excessive, especially since Bard is not 100% wrong.
The James Webb telescope was indeed the first to photograph a specific exoplanet (HIP 65426 b).
In the September 2022 press release celebrating this photo, NASA is careful not to return to the precedent of 2004, when a European team captured an image of the exoplanet 2M1207b without really knowing what it was.
Bard therefore allowed himself to be duped by the narrative talent of NASA communicators.
Does this deserve a $150 billion stock market loss for Alphabet?
“The reaction of the markets is understandable and could even have been more violent because you have to take the context into account”, assures Alexandre Baradez, market analyst at IG France.
Since the appearance of the conversational agent ChatGPT, last November, there has been a race for chatbots among the Tech giants which seems to be turning into a fixed idea among investors, underlines the American economic channel Bloomberg.
Alphabet's misadventures are largely linked to Microsoft's bet on ChatGPT.
The Redmond firm has invested more than 10 billion dollars in the company's conversational agent Open AI and has announced that this "Mr IA Knows-All" will be integrated into Bing… its search engine.
ChatGPT is supposed to allow this Google competitor to better understand user queries and provide more relevant results.
Enough to give investors the impression that the king of search engines was taken aback and hastened to pull a chatbot out of his hat to respond to the threat of the ChatGPT-Bing alliance.
Bard's error - moreover in a promotional video - convinced investors that this AI was not yet ready to stand up to that of Open AI.
In other words, Alphabet seems to have lost the first round in a war against an adversary who "potentially represents an existential danger for Google's economic model, which is almost 80% based on advertising in its search engine", underlines Alexandre Baradez.
Everyone wants their chatbot?
But this stock market disappointment is not just a sanction imposed on Alphabet for having been overtaken by Microsoft.
It is also more generally a reflection of the importance assumed by chatbots in the eyes of stockbrokers.
Indeed, the Chinese giant Baidu experienced a stock market surge on Wednesday after announcing that its own chatbot would be available from March.
A news which, in turn, led to the fall of the action of Alibaba, the other Chinese giant, which had not yet mentioned its plans to counter ChatGPT and Baidu.
Error corrected on Thursday: Alibaba, in turn, ensured that it was working on an in-house chatbot… but without giving much more detail.
Regardless, that was enough to reassure investors, allowing Alibaba's stock to soar.
To believe that the stock market survival of Big Tech currently depends on their projects in terms of chatbots.
Conversational agents represent "a possible growth driver for large groups that may need them", underlines Alexandre Baradez.
Groups such as Google, Microsoft, Alibaba and Facebook are "what we call growth companies, that is to say that the stock market performance depends a lot on their ability to post ever higher growth rates" , notes Alexandre Baradez.
Problem: these behemoths have all experienced a slowdown in the pace of their growth lately.
In this context, ChatGPT & Co have revived investors' hopes of seeing the tech giants return to insolent growth.
But for Alexandre Baradez, it is still "a little too early" to say that a chatbot can make or break the stock market fortune of a tech group.
The reactions of stockbrokers are still very much irrational.
There is no evidence, for example, that ChatGPT will actually significantly improve Bing's results and take market share from Google.
“Conversational agents may experience a fate similar to autonomous cars. At first everyone wanted to invest in this sector, but ten years later, we are still waiting to see the promises materialize”, underlines Alexandre Baradez.
For this expert, chatbots still have to prove that they are good at something other than helping students cheat or writing songs more or less in the style of Australian star Nick Cave.
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