Alphabet Shares Plunge on Tuesday
Alphabet shares fell nearly 5% on Monday and continued their decline in pre-market trading on Tuesday, dropping 2%, after several top AI experts left the company for rival firms.
Among the most notable departures were John Jumper from Google's DeepMind division, as well as Noam Shazeer, Google's head of AI marketing.
However, Jefferies believes the market's reaction is overblown, asserting that the exodus of researchers between companies has become commonplace due to intense competition for scarce AI talent, and is not a sign of weakness at Google. The bank maintained its "buy" recommendation on the stock with a target price of $445.
Analysts pointed out that Alphabet still possesses strong advantages, including:
Long-term investments in AI.
A large and dedicated research team.
Growing cloud computing business.
Owning its own TPUs, which reduce AI operating costs.
A workforce of nearly 195,000 employees.
The report also explained that the stock's decline was partly due to a general weakness in the shares of major technology companies, in addition to investors shifting towards emerging artificial intelligence companies, as well as concerns related to increased spending on artificial intelligence infrastructure following the company's recent massive funding rounds.
