Alphabet shares fell 4% on Wednesday on what the company would like you to read as a routine executive transition: Demis Hassabis up to chairman of DeepMind and chief scientist of Alphabet, Koray Kavukcuoglu taking day-to-day control, and Jeff Dean off to found a startup — with Google’s blessing and Google’s money.
That’s the press-release version. The market read it completely differently.
Start with what actually walked out the door. It wasn’t two people, as Sundar Pichai’s memo implied. Discovery Loop’s own website lists four founders: Dean, Sanjay Ghemawat, Oriol Vinyals and Quoc Le. Vinyals and Dean were Gemini’s co-technical leads. So on the day Google introduced the executive responsible for shipping Gemini 4, both of the model’s technical leads resigned.
And it’s not the first cut. Noam Shazeer — the transformer paper’s lead author, the guy Google paid $2.7 billion to bring back — left for OpenAI in June. John Jumper, who shared a Nobel Prize for AlphaFold, went to Anthropic days later. Senior Gemini researchers followed him. Now the founder-CEO steps back and the chief scientist leaves entirely. All of that points to Google falling behind and what’s worse is that an insider is now saying the culture in Google AI is rotten.
The tape confirms the timeline problem
Gemini’s flagship update was slated for June but t’s August and it still hasn’t shipped. Semafor reports Google is roughly six months behind the frontier on coding. Axios reporting attributes part of the delay to morale and that’s looking increasingly true.
Meanwhile Hassabis, per Semafor, had been drifting away from day-to-day duties for at least a year. The company confirmed as much by making it official. So the bull case that “Demis is still there as chairman” cuts the other way — he wasn’t fully there as CEO either. He’s been treated like an AI god but that’s not what all the moves point to.
The most interesting market signal on Wednesday wasn’t the stock. It was a thinly-coded thread on Twitter from a senior Google DeepMind research engineer — a veteran of OpenAI and Meta, not a junior with an axe to grind — posting a barely-coded history of the lab: absentee leadership, two failed flagship runs that never made the press, star researchers holding the org hostage for compute and comp, and credit accruing to people who show up for the announcements. Amazingly, she did it while stille employed there (though supposedly on leave).
The worry here is that morale is a leading indicator of shipping velocity and it’s worsening.
Google can obviously recover. Alphabet just earned $120 billion in quarterly revenue, up 24%, with cloud up 82% — growing faster than AWS and Azure. It’s coming off its best year in the market since 2009.
But the AI trade in this name has always rested on one assumption: that Google’s unmatched depth of research talent guarantees it can’t fall permanently behind. That assumption took real damage this week; the talent is no longer unmatched and the thread argues that the talent wasn’t real, but optics.
Google is talking about shipping AI models/products monthly but with this shakeup, there is a possibility that Gemini 4 slips again, or that the next departure list is longer than this one.
GOOG is down 0.4% so far today.
Also notable as a reference check, the “only competent VP” she’s refering to was likely Yonghui Wu who joined ByteDance in February 2025 as head of Seed foundational research, reporting directly to CEO Liang Rubo. He’s grown it to 2000 employees and shipped Seedance 2.0, which immediately went viral for hyper-realistic clips.
This article was written by Adam Button at investinglive.com.