Google’s Value Drops by $500bn as AI worries spread Wall Street
Alphabet, Google’s parent company, lost just over $500bn (£374bn) in value on Thursday after giving Wall Street its last business report of the year.
Google spooked investors, and its stock hit a six-month low when it said its AI-based search summaries were hurting ad revenue.
This week, both Microsoft and Amazon gave investors updates. They also joined Google in their plans to keep spending huge amounts of money on an ongoing AI race.
Sadly, investors were disappointed that these plans are making it harder for each company to grow its main business lines. At first, it didn’t look like Alphabet, the company that owns Google, had a bad quarter.
Total revenue rose 25% from the previous year to $127.6bn. Google Cloud continued to do well, with sales up 103% to almost $31bn.
However, the company saw a big drop in profits 25% during the quarter. It also posted negative free cash flow for the second time in its history as a public company. This time it was more than $9bn. Google lost almost twice as much money as it did three months ago. Cash flow shows how much money a business has left over after paying for activities and investments. This means that Alphabet is spending more money than it is making. That new amount of money is almost entirely going to Google’s investments in AI.
The company’s stock market value dropped from $3.97 trillion the day before to $3.46 trillion by the end of Thursday. The number of ads Google was able to sell during the quarter went down because its search engine now defaults to AI summaries of a person’s query.
Also Read:
Sultan Bin Ahmed inaugurates Global Congress for Children and Youth Film
Blowback From Unchecked AI is One of the Risks Outlined for Anthropic Investors
