Alphabet Inc. Class C (GOOG.US, GOOGL.US) AI tools triggered the sell-off of gaming stocks. Analysts: Market fears response is "unreasonable." Top companies still have an advantage.

In recent days, global game developers' stocks have been heavily sold off due to the impact of Alphabet Inc. Class C's release of the AI tool "Project Genie". However, analysts at mBank SA in Poland pointed out that the market's panic response is "not rational", and the related stock price decline seems more like an exaggerated overreaction. Last Friday, Alphabet Inc. Class C (GOOG.US, GOOGL.US) released an AI prototype tool called "Project Genie" that can generate virtual 3D worlds, sparking investor concerns that this technology could pose a disruptive threat to traditional game developers. As a result, the stock prices of Unity Software Inc. (U.US), Roblox Corp. (RBLX.US), and Polish gaming giant CD Projekt SA all plunged. In Monday's trading, the stock prices of Unity and Roblox rebounded, while CD Projekt continued to decline for the third consecutive trading day on the Warsaw market, indicating that pressure in the European gaming sector has not completely dissipated. mBank believes that the market sell-off has overlooked the clear limitations of Project Genie. Analyst Piotr Poniatowski of the bank pointed out that given the current availability of the tool, the sell-off of game developer stocks last Friday was an "unreasonable overreaction". "Considering the current practical usability of Project Genie, we believe that the stock price drop of game developers last Friday was an unnecessary panic," Poniatowski stated. He also added that AAA-level large game studios, which intuitively seem likely to be impacted, may actually become the biggest beneficiaries of such AI tools. It is understood that the prototype web application of Project Genie allows users to generate playable virtual worlds by entering text prompts or uploading images, and to create characters that move in different environments. However, the tool currently only provides limited gameplay and experience, still far from mature commercial applications. Poniatowski believes that based on the promotional videos released by Alphabet Inc. Class C, the AI tool may increase the number of projects for independent developers and small studios, thereby intensifying industry competition. In contrast, large developers with strong intellectual property and immersive storytelling capabilities are unlikely to have their core competitiveness easily undermined. "From a purely game production perspective, we do not believe that AAA studios will lose their value proposition," stated Wedbush analyst Alicia Reese. "Existing platforms still maintain a strong competitive position."