Google launched new algorithms designed to reduce the memory required for large language models and vector search. This software advancement triggered a downturn in memory and storage hardware providers on Wednesday. Shares of Micron, Western Digital, and Seagate declined as investors weighed the potential for reduced hardware demand.
Alphabet shares fell Tuesday to their lowest level since November. The stock is now approaching bear market territory, representing a 20% decline from its recent peak.
Market analysts attribute the slump to rising bond yields and geopolitical tensions. Alphabet-specific pressures include high AI infrastructure costs and persistent regulatory oversight.