Rezolve AI RZLV plunges 8.33% after warning on generic LLM risks in chatbots

Rezolve AI (NASDAQ: RZLV) plunged 8.33% in pre-market trading on December 19, 2025, following a stark warning about the risks posed by generic large language models (LLMs) in enterprise chatbots. The decline came after the company highlighted a high-profile incident involving a major retailer’s chatbot, which generated inappropriate responses to sensitive topics, including references to Nazi Germany and adult products.

The company emphasized that generic LLMs, designed for broad language generation, lack the precision and control required for live commerce environments. CEO Daniel Wagner criticized such models for “hallucinating” or deviating from intended use cases, arguing that chatbots must adhere to strict commercial boundaries to avoid damaging brand reputations. Rezolve AI contrasted its proprietary “Brain Suite” platform, engineered for deterministic, non-hallucinatory responses within verified data domains, as a safer alternative for enterprises.

Analysts noted the stock’s sharp drop reflected investor concerns over the scalability of Rezolve AI’s solutions amid broader industry challenges. While the firm positions itself as a leader in “Agentic Commerce” with a focus on compliance and governance, the incident has reignited debates about the readiness of AI tools for real-world deployment. The market remains divided on whether the crisis will accelerate demand for specialized AI systems or be dismissed as a temporary setback in the sector’s evolution.

Rezolve AI’s recent struggles underscore a growing tension between innovation and oversight in the AI sector. As companies like Rezolve advocate for tighter controls and domain-specific AI development, investors are closely watching how effectively these strategies can be scaled. While the firm’s deterministic model may attract cautious enterprises, broader adoption will likely depend on whether competitors can address similar concerns without stifling the creative potential of AI.

Despite the immediate volatility, Rezolve AI’s long-term prospects may benefit from increased demand for secure AI systems. However, the company must continue proving the value of its platform in real-world commerce scenarios and navigating regulatory shifts that could reshape the AI landscape in 2026 and beyond.