Alphabet shares fall 4% as Google reshuffles AI leadership

Alphabet reshuffled its AI leadership Wednesday, moving Demis Hassabis from Google DeepMind CEO to chairman as four veteran engineers departed to found a startup, sending shares down 4 percent.

"Hassabis and I have been long discussing a role that allows him to put his full attention on actively shaping the future of AGI," Sundar Pichai, chief executive at Alphabet, said in a 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."

Koray Kavukcuoglu, the unit's chief technology officer, will assume day-to-day responsibilities as senior vice president. Jeff Dean, Sanjay Ghemawat, Oriol Vinyals and Quoc Le left to launch Discovery Loop, a public benefit corporation focused on machine learning, science and engineering research. Google invested in the startup and signed a cloud computing partnership with its cloud division.

The shakeup comes as Google DeepMind's flagship Gemini model remains unreleased despite a planned June launch, while rivals Anthropic and OpenAI each hired a star Google AI researcher this summer. Alphabet shares fell 4 percent on the news, reflecting investor concern about Google's competitive position in the AI race.

Brain Drain Accelerates as Rivals Poach Talent

The departures extend a pattern of talent flight from Google's AI unit. Noam Shazeer, who co-led Gemini development alongside Dean and Vinyals, left for OpenAI in June — less than two years after Google paid billions to hire him and his research team away from the startup he led. The same week, Nobel Prize-winning senior research scientist John Jumper said he would join Anthropic.

Dean and Hassabis were considered the two leading AI figures at Google for years. Hassabis co-founded DeepMind in 2010 and continued to run the lab from London after selling it to Google for around $650 million in 2014. Dean co-founded Google Brain in 2011, and the two units merged in 2023 after OpenAI's ChatGPT launch caught Google off guard. Under their combined stewardship, Google released Gemini 3 last November, which the industry widely saw as closing the gap with leading models from Anthropic and OpenAI.

But subsequent advances from those rivals, as well as momentum for cheaper Chinese open-source models, have put Google on the defensive. At Google's annual developer conference in May, Pichai and other leaders touted Gemini's cost advantage rather than its raw performance.

Hassabis Shifts Focus to AGI and Drug Discovery

Hassabis, who has long prioritized research over profits, will explore research and strategy related to the societal impacts of AGI and will have few direct reports, a Google spokesperson told Reuters. In his memo to staff, he touted "great progress" on Google's AI models including an unreleased upgrade called Gemini 4.

He also said he would spend more time with Isomorphic Labs, a drug discovery company that spun out of DeepMind, where he is founder and CEO. "I've always believed the No.1 application of AI should be to improve human health," he said. "It's time for AI to prove its unequivocal value to the world, and what better way to demonstrate that than to help finally cure diseases like cancer."

Discovery Loop received investment from Google and penned a partnership with its cloud division to provide computing capacity. Vinyals, Le and former OpenAI chief scientist Ilya Sutskever coauthored a 2014 research paper that became foundational to modern AI research by establishing the concept that scaling up data to "pre-train" AI systems would send them to new heights.

Alphabet did not provide details on what precipitated the moves or their coincident timing. The leadership changes raise questions about Google's ability to retain top AI talent as competition intensifies with OpenAI, Anthropic and Chinese open-source model developers. Alphabet shares fell 4 percent on the announcement, and the company faces pressure to deliver its delayed flagship Gemini model as rivals ship competitive products.

This article is for informational purposes only and does not constitute investment advice.