Google Is Reshuffling Its AI Department. Its Stock Is Falling

Google's stock is falling on Wednesday after the company announced a reshuffling of its AI department.

Longtime chief scientist Jeff Dean is leaving after 27 years and will start his own company. He will be replaced by the CEO of DeepMind Demis Hassabis, who will also be the chairman of that unit.

"After an incredible 27-year run, Jeff Dean is at a moment where he wants to try something new, and we're excited to support him in that," company CEO Sundar Pichai said in a blog post. He will be joined by Sanjay Ghemawat, also a senior employee. The company's shares fell more than 4% at 1:39 p.m. ET following the news.

Hassabis, on his end, said that "that now is the right time for me to hand over my day-to-day operational responsibilities at GDM, so that I have the time and space to focus on the big picture and help influence what is to come to the best of my ability." Elsewhere, DeepMind technology chief Koray Kavukcuoglu will be the new head of the AI division.

Dean said in a social media post of his own that his startup will be called Discovery Loop and will focus on AI for science and engineering. It will be as a public benefit corporation.

Despite Wednesday's drop, Google's stock has soared this year on strong AI growth. It reported its sales increased by more than 80% year over year in the second quarter, exceeding analysts' expectations. Shares have climbed 86% over the past 12 months and is up 28% year to date.

However, shares fell after the earnings report after increasing capital expenditure for the year to between $195 billion and $205 billion. They have since recovered along with the broader market.