Published: February 26, 2024 at 6:29 PM ET
Alphabet is not immune to Wall Street’s concerns about its efforts in artificial intelligence, and the company’s stock has rebounded from past events. Is the recent backlash against image generation tools, which have since been discontinued, any different?
Wall Street now appears concerned about the fallout from the image generation feature within the Gemini chatbot, which has been criticized for sometimes creating racially insensitive images. Even Google executives acknowledged that they can sometimes be “inaccurate or even offensive.”
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Alphabet is not immune to Wall Street’s concerns about its efforts in artificial intelligence, and the company’s stock has rebounded from past events. Is the recent backlash against image generation tools, which have since been discontinued, any different?
Wall Street now appears concerned about the fallout from the image generation feature within the Gemini chatbot, which has been criticized for sometimes creating racially insensitive images. Even Google executives acknowledged that they can sometimes be “inaccurate or even offensive.”
See also: Google to stop generating images of people with its Gemini tool after criticism
alphabet stocks
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Google
Shares fell more than 4% on Monday, reminiscent of last spring when investors criticized the company for its AI failures and its relative positioning with Microsoft Corp.
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While Alphabet stock has recovered from these episodes, and has since recovered some, Ben Reitz, an analyst at Melius Research, sees potential problems ahead for the search giant.
“Some of Google’s AI announcements seem rushed and confusing.”
and scattered,” he wrote in Monday’s report.
While Google paused the tool’s image generation, Reitzes wondered whether the company had hurt its brand by rolling out the tool.
“Regardless of your views, if Google is seen as an unreliable source of AI for some people, that’s bad for business,” he said.
Additionally, Reitzes is concerned about the positioning of Google’s search as AI becomes more prominent as a way for users to address their queries. “This ‘once-in-a-generation’ change presents an opportunity for competitors in itself, but the opportunity becomes even greater if a significant portion of users become concerned about Google’s illusions and bias,” he said. “It will become,” he wrote.
In his view, other large technology companies generate more recurring revenue than Alphabet. While the company does dominate the search market, “Google can easily underperform its competitors if it makes a few mistakes in search (as it did last quarter),” Reitzes said.
He gave Alphabet stock a “hold” rating and called it “undervalued for a reason” in his latest note to clients. Reitzes has an “extensive and frankly un-Google-like list of wishes for the company,” including that executives simplify messaging around AI products, make more comprehensive predictions, and “increase the company’s stock price.” This includes conveying the feeling that “is a scoreboard.”
For now, he’s looking at Amazon.com Inc.
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,
Meta Platforms Co., Ltd.
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,
Nvidia Inc.
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and Microsoft
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is more proud of its “intangible assets” and says, “It’s just as easy to buy these stocks instead.”
