If you read carefully, you'll notice that the article never actually claims there is a causal relationship between the ad and the share price dropping ("price dropped because of X"), just a temporal one ("X happened, and some time after that the price dropped"). This is a trick the business media pulls all the time. The reality is that they don't know why the share price changed, but reporting just on the change isn't very interesting, so they'll pick some plausible reason and run with it.

The causal implication in the title is basically made up (8% drop entirely because of incorrect example).

The way I see it, in this AI war, considering google already has an almost monopoly, they have a lot to lose and not much to win, and the opposite for the remaining players.

Because Google’s stock price was based on a lot of hype about their incredible capabilities and future growth. The contrast between the 2 presentations pop the bubble a bit. Plenty of people believed that Google could easily keep up with any thing other companies could throw its way and remain dominant in search indefinitely. This is perhaps the first time that is really being called into question.

If your ad shows your brand new AI product making an _obvious_ error... that's a problem. It signals that you cannot trust anything else without actually checking...

We think that stock prices are based on earnings or profits. But they aren't (except for stocks that pay dividends.)

A more sophisticated way of looking at it is that stock prices are based on how people view earnings or profits. More specifically, what they expect future earnings or profits to be. From this perspective, it makes a bit of sense - if everybody thought that Bard was going to be a huge new pile of money for Google, and now it looks like it won't be, then people think Google stock is worth less.

An even more sophisticated way of looking at it is that stock prices are based on how people view how other people view future profits. So if you think everyone else is expecting Bard to make Google a boatload of money, then if the Bard demo goes badly, it may be rational to sell, even if you personally didn't expect Bard to be any good.

As people have said this isn't necessarily cause and effect, but if you can't get your new product working correctly in the controlled environment of an ad it certainly shakes my confidence that it will be working reliably in practice.

rational? stock prices are speculative.

i'm glad that layoffs pump got wiped out, at least for now.

i imagine the stock price drop is more due to microsoft incorporating GPT than the wrong answer