US stocks: Alphabet shares fall 4% as DeepMind chief shifts role in Google’s AI shakeup

Alphabet’s Class C shares fell 4.32%, or $16.21, to $359.14 on Wednesday after Google announced a sweeping overhaul of its AI leadership. DeepMind CEO Demis Hassabis is stepping away from day-to-day management while several prominent Gemini researchers are leaving the company, according to a Reuters report.

The stock opened at $380 and rose to $381.81 before turning sharply lower, touching an intraday low of $355.16.

The shakeup comes at a critical time for Google DeepMind. The flagship version of its latest Gemini model remains unreleased despite a planned June launch, raising concerns that Google is falling behind rivals Anthropic and OpenAI. Both companies have also recruited prominent Google AI researchers in recent months.

Hassabis, a Nobel laureate, will take the newly created position of Alphabet chief scientist and move from CEO to chairman of Google DeepMind. In a memo to employees, he said the change would allow him to focus more closely on artificial general intelligence, or AGI.

“[Hassabis] and I have been long discussing a role that allows him to put his full attention on actively shaping the future of AGI,” Alphabet chief Sundar Pichai said in a separate companywide memo. “It’s work that is vitally important to Alphabet and humanity, and I can’t imagine a better person than Demis to do it.”

Google DeepMind Chief Technology Officer Koray Kavukcuoglu will assume day-to-day responsibility for the unit as senior vice president. He will also retain his position as Alphabet’s chief AI architect.

Veteran engineers Jeff Dean, Sanjay Ghemawat, Oriol Vinyals and Quoc Le have left Google to launch Discovery Loop, a public-benefit corporation focused on breakthroughs in machine learning, science and engineering.Alphabet did not disclose what prompted the leadership changes or explain their coincidental timing, according to a Reuters report.

A Google spokesperson told Reuters that Hassabis, who has long prioritised research over commercial returns, will focus on AGI strategy and its societal implications while overseeing a small team.

Hassabis said Google had made “great progress” on its AI models, including an unreleased upgrade called Gemini 4. He also plans to spend more time at Isomorphic Labs, the DeepMind drug-discovery spinoff that he founded and leads.

The overhaul follows setbacks in Google’s AI product pipeline. The company delayed Gemini 3.5 Pro in July to improve its performance in areas such as coding, according to a Bloomberg report.

Despite those concerns, Alphabet has benefited from rapid growth in its AI-driven cloud business. Google Cloud revenue surged 82% to $24.77 billion in the latest quarter, beating the $24.56 billion estimate and rising from $13.6 billion a year earlier, Yahoo Finance reported.

Alphabet also raised its annual capital-spending forecast to between $195 billion and $205 billion from $180 billion to $190 billion, briefly sending its shares down more than 6% before they recovered.

The stock has gained 86% over the past 12 months and 15% this year, outperforming Amazon, which rose 28% over the past year, and Microsoft, which declined more than 8%.