Ask HN: Is one wrong result to blame for fall of Google stocks?

[Tschayba]

To me it sems to far fetched that one wrong result would undermine the value of Google stocks (https://www.smh.com.au/business/companies/google-suffers-140b-wipeout-after-bard-ai-chatbot-gives-wrong-answer-20230209-p5cj3a.html).

I think that it is more likely that this is related to financial results/expectations and plans rather than one.

The story of one query does sound appealing for headlines but it I think that there is more. Maybe disbelieve of investors into AI technology at this stage.

[mikewarot]

Google stopped being the best search engine, paid for my ad revenue into a profit driven monster somewhere along the way. A few years ago, someone had a big idea to try to answer questions rather than be a useful tool for finding answers. It's been downhill ever since.

As for stock value, it's all set by the most recent transactions, so you're really talking about expected value, not actual value. Actual value has been declining for a long time, and now expectations are catching up.

Google could pull out of this, but it would require a bit of a rethink. If I were Google king for a while, I'd try to put back the better search of the past, as "classic google" for those who need it.

Next I'd take the search results, and use an LLM and clustering to find the top 10 ideas in those results, and group the results accordingly. I'd be willing to bet all the SEO spam would fall into one group by the nature of the beast, and thus be easy to ignore for the users.

[dougmwne]

Absolutely not. It is A result of a strong new launch from Microsoft and a weak presentation of vaporware from Google. It opens that possibility for the first time ever that Google’s dominance in Search might not be as impenetrable as it has always seemed. Lots of company value for tech companies is based on the expectations of future growth, so small strategic missteps can have a big effect on price.

But where as this is a side project for Microsoft and they are getting lucky, this is the main event for Google and they are going to aim every company resource at catching up.

Let’s see if Google can stil execute a new successful product when they have to!

[damiankennedy]

and......it's cancelled. /s

[kypro]

Google makes most of its money from ads and over the last decade Google along with Facebook have basically had a duopoly on digital ad spend.

As other competitors enter this space (Tiktok, Amazon, Microsoft and maybe Apple) more ad dollars will move away from Google and Facebook and into their competitors.

For Google to retain its large share of digital ad spend they need to ensure their services remain popular and give advertisers reason to spend with them and not with competitors.

Imo Google is being attack on all fronts right now. On one side of this you have lots of competitors entering the digital ad space and for the first time they're beginning to challenge the Google/Facebook digital ad duopoly. At the same time Google's core product (search) is now also being challenged by Microsoft.

It's not difficult to now envision a world in which over the next decade Google's share of search drops and their share of digital ad spend drops. And meanwhile they'll probably need to spend more on innovation and new products (with unproven profitably) to defend themselves from increased competition.

There's nothing investors like less than uncertainty and Google's future is much less certain today than it was a few years ago. They'll continue to be a great company, but as an investor you now have to reassess growth and profitability risks and ask whether the risk/reward of Google's stock today has changed. In addition to this Google's stock has performed okay over the last year when compared to their digital ad competitors (Facebook & Snapchat) and even relative to the stocks of other large tech companies (Amazon, Adobe, Salesforce).

I think what we're seeing is the market begin to question and reassess assumptions made about Google which has always been seen as a very safe investment. The recent drop is possibly an over reaction when viewed from the perspective of a single catalyst, but maybe part of the issue is that a lot of assumptions have been wrong for some time and only now are they being questioned in light of recent events.

My guess is that you'll see volatility for some time yet until investors start to become confident that risks have been adequately repriced.

[sogen]

Search is Google’s main business.

Displaying an incorrect result in their flagship upcoming product shows that there were no due diligence steps in creating this, made even worse by being publicly published in their own social media account, without checking it first, which would have taken 5 minutes to do so.

[quickthrower2]

Zoom out and this is a tiny blip. Covid and inflation spooks have had a much greater effect.