Alphabet loses over $500bn in market value as AI concerns hit Wall Street

Alphabet, the parent company of Google, saw its market capitalisation drop by just over $500 billion on Thursday, falling to $3.46 trillion after the firm warned that AI‑driven search summaries were hurting ad revenue.

Despite a 25 % rise in total revenue to $127.6 billion, driven by a 103 % surge in Google Cloud earnings to almost $31 billion, the company’s profit fell 25 % and it recorded a negative free cash flow of more than $9 billion – the second time in its history it has shown a cash outflow.

Analyst Tracy Woo said the results “highlight the challenge of funding massive AI investments while maintaining the strength of established businesses.” Google’s chief business officer, Phillip Schindler, said he was “very good about our trajectory” for the AI‑focused search version, yet the shares slid almost 13 % to a six‑month low.

Other tech giants also reported disappointing figures. Amazon’s shares fell 6 % after revealing a negative cash flow of $42 billion, while Microsoft’s stock slipped less than 1 % despite a 19 % revenue increase to $92.3 billion and a 30 % rise in its cloud business.

Wall Street investors appear wary of the heavy spending required to sustain the AI race, questioning whether the promised future revenue will materialise.

Source: BBC News. Photo: Rômulo Queiroz / Pexels.