Alphabet's shares fell 7% on Monday, marking its worst day in a year, as fears surrounding its artificial intelligence capabilities intensified. The company's challenges were exacerbated by the recent exits of Noam Shazeer, a vice president of engineering and co-lead of the Gemini AI models, who left for OpenAI, and John Jumper, a DeepMind VP, who joined Anthropic after a notable career at Google.
These departures come shortly after Google launched new AI products, including the Gemini 3.5 Flash model, and amid a backdrop of heavy investment in AI, with Alphabet raising $141 billion in debt and equity since October.
The situation is further complicated by comments from Microsoft CEO Satya Nadella, who suggested that the AI market is becoming commoditized, potentially undermining the value of Alphabet's significant investments. Additionally, users reported outages on Gmail and YouTube, adding to the company's troubles.
Investors may now question whether Alphabet's AI spending will yield a sustainable competitive advantage or merely increase pressure on profit margins