Google's AI Error, Which Prompted A $150 Billion Selloff This Week

The market had an emotional reaction to GOOGL's AI-driven selloff, which saw the tech giant's stock drop more than 11.7% in two days. It began after the company's search & AI event revealed a potential issue with their algorithmic capabilities. This left investors worried and uncertain of GAMMA tech stocks' future prospects. Yesterday and today saw a serious drop of GOOGL's market cap, with more than $100BN wiped off its value across both days. Goldman Sachs noted that "MSFT's CEO wants to target their search business". Indeed, Wednesday showed one of GOOGL's starkest differences in comparison to MSFT on a 5-year scale, at -7.37%.

In response to the dip in market capitalization of Google, could it potentially eliminate more than 420 S&P500 companies? JPM senior TMT trader Ron Adler thinks not. He believes that investors' reactions toward Artificial Intelligence have been emotional and based on fantasy rather than reality. As Adler queried, will people stop visiting Google when they are searching for something or change their homepage entirely? Highly unlikely, and he goes on to ask - will we ever use the name Bard in our conversations? When it comes to basic online searches, do we really rely on Siri or Alexa? Surprisingly not. For most of us, the habit of using Google is deeply ingrained and hard to break.