Gaming Stocks Get Hammered After Google Reveals New AI Vibe Coding Technology

Google has rolled out a new AI technology, Project Genie, that claims to allow users to create interactive worlds “generated in real time.” Apparently some video game investors are spooked, as a number of gaming companies saw their stock prices get hammered today.

In particular, Rockstar Games parent company Take-Two’s stock price took a massive beating, falling by more than 9% today, wiping out billions in market cap along the way. Roblox Corp., which makes the hugely popular game Roblox, saw an even steeper sell-off, with the share price dipping by more than 12% today alone. Unity, the company that makes the popular Unity game engine, saw a massive 30% stock price slip today.

Stock prices are known to bounce around in this way based on real-world news headlines, but the sell-off happening today is more substantial than normal. People have already used Project Genie to make worlds that rip off Mario, and it’s not hard to imagine how things may snowball from here and invite lawsuits.

Research firm Wells Fargo said in a memo that nothing it’s seen from Project Genie changes the company’s view that game development studios will use AI tools to help make games faster, and this will be an overall “secular positive” for the business of video games.

“Consumers may be able to vibe code virtual worlds to explore, but there has to be a platform for online engagement, and there will still be a market for higher quality experiences,” the research firm said, as reported by Seeking Alpha.

Take-Two boss Strauss Zelnick has said AI is a compelling technology for game development, but people are largely overstating what it can do. No one will be able to prompt an AI technology with, “Please develop the competitor to Grand Theft Auto that’s better than Grand Theft Auto” and have it deliver something good, he said. Humans will always be needed to make compelling art, and tools like AI may exist to help them, but never to replace human creativity completely, the CEO said.

A recent survey of game developers found that more than 50% of surveyed developers said they believe generative AI is a threat to the video game industry. More than 35% said they were already using generative AI in their processes.

There is a lot of fear and excitement about AI today, with companies like OpenAI, Anthropic, Amazon, Microsoft, Google, and others seeing their valuations soar on promises that advancements to AI could significantly change a number of different industries, including video games. Some are predicting prosperity and growth, while others are projecting job losses and numerous other negative consequences. Consensus is forming that an AI bubble may be forming, or even that it’s close to popping. Other industry experts say it’s not like the dot-com crash. Only time will tell how things play out.

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