Shares of several video game companies fell sharply on Friday after tech giant Google (GOOGL) introduced a new artificial intelligence model that could change how games are created. Indeed, shares of Take-Two Interactive (TTWO), the maker of Grand Theft Auto, are down about 9%, while Roblox (RBLX) is down 12%. At the same time, Unity Software (U) dropped roughly 21%, as concerns grow about how the new technology could affect traditional game engines.
Claim 50% Off TipRanks Premium
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
Interestingly, Google’s new AI system, called Project Genie, allows users to create interactive digital worlds by using simple text prompts or uploaded images. Unlike traditional games, which rely on pre-built environments, Project Genie generates the world in real time as players move and interact. Google said that the model can simulate physics and changing environments on the fly, which could significantly disrupt how video games have been developed for more than a decade.
Normally, video games are built using engines like Epic Games’ Unreal Engine or Unity’s engine, which handle things like gravity, lighting, sound, and character movement. These projects often take five to seven years to complete and can cost hundreds of millions of dollars. However, Project Genie could shorten development timelines and lower costs, which is why developers are paying close attention. Still, the growing use of AI in gaming remains controversial. While nearly 90% of developers already use AI tools, many fear job losses after years of industry layoffs.
Is GOOGL Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 24 Buys and six Holds assigned in the past three months. Furthermore, the average GOOGL price target of $351.37 per share implies 4% upside potential.
