Google may be forced to sell Chrome.
Perplexity AI has made an unsolicited $34.5 billion all-cash offer for Google’s Chrome, a move that coincides with concerns of a pending bubble in artificial intelligence (AI) stocks.
The bid is more than double Perplexity AI’s reported valuation of $14 billion to $18 billion, highlighting the US-based AI start-up’s ambitious expansion plans. At this morning’s exchange rate of R17.56, the offer is worth R605.7 billion, compared with Perplexity’s maximum value of R316 billion.
AI, warns World Wide Worx MD Arthur Goldstuck, could well collapse into itself, noting this is “a big threat to markets in the short- to medium-term”.
Goldstuck sees Chrome as a robust platform, saying it “helps underpin the search business but is also a good business platform in its own right”. He adds that it’s an excellent platform for YouTube, although not as effective for AI, even though it does more for ChatGPT than for Gemini, its own AI platform.
TradingView notes that OpenAI CEO Sam Altman has warned the industry may be entering a ‘fast fashion’ phase, where applications are rapidly produced and commoditised, rattling confidence in AI stocks.
“At the heart of the pullback is a mounting fear that AI tools, faster, cheaper, and increasingly capable, could undercut the value of incumbent software products,” the platform says.
AI, Goldstuck adds, is even faster than ‘fast fashion’. “The cutting-edge technology is more like instant noodles: consumed quickly and replaced instantly. Every new model or feature renders the last one obsolete before it’s had time to mature or stabilise. AI’s rapid pace of innovation creates an equally rapid pace of redundancy.”
TradingView states that investment banking and capital markets firm Jefferies’ Brent Thill told CNBC: “Investors are fearing that AI is going to eat software, and multiples are going to fall apart… I think the fear is overblown. But the narrative is shifting fast. Until confidence rebuilds, software could remain in the AI crosshairs, both as a market and a metaphor.”
“In effect, AI is eating itself: training on its own outputs, overloading markets with iterations, and ultimately risking a collapse in trust and economic value,” Goldstuck adds.
David Shapiro, chief global equity strategist at Sasfin Wealth, says the current landscape is difficult to navigate. “The bottom line is that it is not that clear. It will take time to play out… I’m struggling with these issues from an investment positioning point of view.”
Shapiro notes that the rapid pace of AI development leaves users uncertain about which models to use, comparing the choice to deciding between a Ferrari or a Toyota. Companies are also weighing whether they can develop specialist software in-house using AI, rather than purchasing from providers such as Salesforce, ServiceNow and SAP, while keeping a close eye on budgets.
Chrome, the world’s largest search engine, is the focus of a US anti-trust investigation. Potential remedies under consideration could include forcing Google to sell the browser, though the company has not indicated any intention to do so and plans to appeal the ruling.
Google parent Alphabet has a market capitalisation of $2.5 trillion (R43.9 trillion), ranking it fourth among the world’s most valuable companies.
Various news reports indicate that Perplexity has pledged to maintain Chrome’s open-source Chromium engine, keep Google’s search engine as the default, and invest over $3 billion in the Chromium project over the next two years.
ITWeb could not locate a direct statement from Perplexity AI, despite asking the AI tool itself, which instead provided investment advice.