Business & Finance
Alphabet’s Market Value Drops $500 bn After AI‑Related Earnings Report
By Today News Hours Editorial Desk
Alphabet, the parent company of Google, lost more than $500 bn (£374 bn) in market value on Thursday after its earnings release. The company’s share price fell to a six‑month low following a disclosure that its new AI‑powered search summaries were impacting ad revenue. Alphabet’s total revenue rose 25 % year‑over‑year to $127.6 bn, driven by a 103 % increase in Google Cloud revenue to nearly $31 bn. However, profits fell 25 % and the company posted negative free cash flow of over $9 bn for the second time as a public company, a loss that is almost twice the cash‑flow deficit reported three months earlier. The new spending is largely directed toward AI investments.
By the end of Thursday, Alphabet’s market capitalization had fallen to $3.46 trillion from $3.97 trillion the day before. The company’s core ad business, which relies on sales of ads alongside search results, remains the majority of its revenue. Forrester principal analyst Tracy Woo said the results highlighted the challenge of funding large AI investments while maintaining the strength of established businesses.
Google’s chief business officer Phillip Schindler had expressed confidence in the AI‑enhanced search engine, but the stock fell almost 13 % on Thursday, its second lowest level of the year.
Amazon also saw its shares decline after reporting quarterly results that disappointed investors. The company posted 11 % sales growth to $201 bn but reported negative free cash flow of $42 bn, a figure that is six times higher than the previous quarter. CEO Andy Jassy said the spending was driven by opportunities in two areas that could eventually generate $1 trillion for Amazon, though he did not specify which businesses. He referenced Amazon’s own chip manufacturing and its AI developer platform Bedrock, which offers access to major AI models.
Microsoft’s earnings were less dramatic. The company’s shares fell less than 1 % after reporting a 19 % revenue increase to $92.3 bn and a 30 % growth in its cloud business to $63 bn. Microsoft also announced a reduction of thousands of jobs and a $5 bn cut in AI‑related investments. CEO Satya Nadella noted that the use of its AI tool Copilot had nearly doubled automated tasks since July, with daily users up 500 % from a year earlier.
Analyst Tracy Woo said that while enterprise demand for AI remains strong, investors are increasingly focused on which businesses will ultimately capture the value of AI.