The Google logo. [Reuters]
The Google logo. [Reuters]

Shares of Alphabet, Google's parent company, have fallen nearly 15 percent from their all-time high in May, erasing $690 billion in market cap in just over three months. Analysts say mounting concerns about the company falling behind in the AI race, compounded by the loss of key personnel, have driven the slide.

According to Bloomberg, Alphabet's share price surged more than 150 percent in the 12 months through May 13, with its market cap hitting a record high of $4.84 trillion.

Since then, however, the stock has reversed course, falling to $4.15 trillion on Thursday (local time). Alphabet posted the most striking gains among the "Magnificent Seven" in the year leading up to that peak, but the market's view is that much of that premium has since been erased over the past three months.

Bloomberg identified several factors behind the selling pressure: an exodus of AI talent, delays in releasing new Gemini models, and deteriorating cash flow stemming from massive investment in AI infrastructure.

Jeff Dean, a central figure in Google's AI strategy, left the company earlier this month along with colleagues to start a new venture, while Demis Hassabis stepped down as CEO of DeepMind to become its chairman. On Aug. 5 — the day news of their departures broke — Alphabet's share price tumbled 4 percent in a single session. Key researchers had previously left for Anthropic and OpenAI as well.

Delays in releasing the next-generation model Gemini 3.5 Pro have also weighed on investor sentiment. Amid assessments that Alphabet trails Anthropic and OpenAI in coding capabilities, only the lightweight model Gemini 3.7 Flash was released on Aug. 13, with no announcement of a follow-up schedule.

Heavy capital expenditure has also pushed free cash flow into negative territory, adding to the pressure. Alphabet issued $25 billion in corporate bonds earlier this month.

Google rebuffed the concerns, saying its "AI momentum and release velocity are at all-time highs," adding that Gemini 3.7 Flash is posting its fastest growth ever and that downloads of its Gemma model have surpassed 1 billion.

Bloomberg noted, however, that some of the investor rotation away from Alphabet appears to be largely a sector-rotation phenomenon. The contrast is stark with Microsoft, whose share price has climbed more than 25 percent since the company reported its fastest cloud sales growth in four years at its July 29 earnings release.


yckim6452@heraldcorp.com