Shares of Alphabet plunged 5.04% during intraday trading on Wednesday, as the company unveiled a sweeping leadership overhaul at its Google DeepMind artificial intelligence division and confirmed the departure of several veteran AI researchers, intensifying concerns about the tech giant's competitive position in the AI race.

The sell-off was triggered by news that Demis Hassabis, the Nobel Prize-winning co-founder of DeepMind, is stepping down as CEO to become Alphabet's chief scientist and chairman of Google DeepMind. Koray Kavukcuoglu, the unit's chief technology officer, will assume day-to-day leadership of the division. The shakeup comes at a critical juncture, as the flagship version of Google's latest Gemini model remains unreleased despite a planned June launch, fueling investor fears that Alphabet is falling behind rivals Anthropic and OpenAI.

Compounding the negative sentiment, Jeff Dean—one of Google's earliest employees and a key architect of its AI strategy for the past 15 years—announced he is leaving the company alongside three other prominent AI researchers: Sanjay Ghemawat, Oriol Vinyals, and Quoc Le. The group is launching a new startup called Discovery Loop, focused on automating machine learning research. Their departures add to a string of recent talent losses, including Noam Shazeer's move to OpenAI and John Jumper's jump to Anthropic. Broader concerns about AI capital expenditure sustainability also weighed on Alphabet, with analysts highlighting that the company's future infrastructure commitments have ballooned to $811 billion, raising questions about long-term returns on its massive AI spending.