The humans departing Alphabet (GOOGL) are also taking a piece of the tech beast’s stock price with them.
Shares of Alphabet are down 6% in the past month versus a 3% advance for the S&P 500, per Yahoo Finance AlphaSpace data.
“There’s two debates that are weighing on Alphabet shares. One, is that search slowed down a little bit more than investors expected [in the second quarter]. If you go back 15 months ago there was a heavy debate around Alphabet at that time. There was real questions how search would survive in an AI first world. So you were in a different spot with the stock in the three hundreds, but a little bit of a disappointment of search weighed on it. The second bigger theme that’s weighed on it is there’s been brain drain. There’s been departures from folks at Gemini, Google, DeepMind, Google broadly, and Gemini’s next generation model has been delayed — the 3.5 Pro. And now they’re talking about Gemini four. We’ve seen this with other companies. Meta (META) went through it 12, 15 months ago when they ripped up the playbook and started spending billions,” Eric Sheridan, business unit leader of the TMT Group within Goldman Sachs Research, said on Yahoo Finance’s Opening Bid (video above).
Several of the more prominent names at Alphabet that have left or seen their roles reshuffled include Demis Hassabis and Jeff Dean.
Hassabis is now the former CEO of Google DeepMind, and has moved into a chairman role of that unit. He has also assumed the chief scientist title.
The chief scientist role had been occupied by Jeff Dean. Dean has left the company after 27 years to start his own company with Google senior fellow Sanjay Ghemawat.
“I don’t know that you’re going to see it. I think they have a lot of talent. They have a very deep bench,” Sheridan added on a potential negative impact to the business from Alphabet’s brain drain.
Concerns about AI spending has overshadowed a strong second quarter for Google parent company Alphabet.
The standout was Google Cloud, where revenue surged an eye-popping 82% to $24.8 billion, while the company’s cloud backlog ballooned to $514 billion, underscoring the enormous demand for AI infrastructure.
Revenue at YouTube came in at $11.1 billion, up 13% from the prior year and above consensus estimates for $10.8 billion.
Alphabet’s second quarter capital expenditures came in at $44.9 billion, slightly above Wall Street forecasts of $44.7 billion. Full-year capital expenditures guidance was raised to $195 billion to $205 billion from $180 billion to $190 billion, with a “significant” increase seen for 2027, executives said on the earnings call.
