Google shares dropped recently due to a combination of factors that have raised concerns among investors. Firstly, there were higher than expected expenses and some disappointment in the growth rates of key segments like cloud computing, which did not meet the aggressive expectations of Wall Street. The earnings report revealed that despite a 13% increase in quarterly revenue, the growth in cloud computing revenue and other metrics didn't align with investor expectations for a more substantial beat on earnings.
Moreover, Google's AI advancements, particularly its Gemini AI project, have been under scrutiny. The company has faced delays in launching this anticipated AI model, which is seen as critical in keeping up with competitors in the AI space. This delay, coupled with muted growth in advertising revenue—which is a significant source of income for Google—added to the concerns.
Additionally, an incident where Google's new AI chatbot, Bard, produced an incorrect answer during a demonstration, impacted investor confidence. This mistake highlighted challenges in Google's AI development, contributing to a significant drop in its market valuation.
These factors combined have led to a decline in Alphabet's share price, reflecting investor apprehension about the company's current challenges and future growth trajectory.