Google value plunges by $500bn as AI fears rattle Wall Street
Alphabet's stock value dropped by $500 billion after investors reacted negatively to the company's high spending on AI and the resulting impact on ad revenue. Despite strong revenue growth in Google Cloud, increased operational costs and lower profits have raised concerns about the company's AI-centric strategy.
Why it matters
The market reaction signals growing investor skepticism regarding the immediate profitability of massive AI investments by big tech firms.
Image source, EPA Image caption, Google CEO Sundar Pichai has backed the company's massive spending on AI.
Google parent Alphabet lost just over $500bn (£374bn) in value on Thursday after it rattled Wall Street with its last update of the year on its business operations.
Google spooked investors so badly that its stock hit a six-month low, after it revealed its artificial intelligence (AI) summaries on search were affecting ad revenue.
Microsoft and Amazon also updated investors this week, and joined Google in plans to keep spending astronomical sums of cash in an ongoing AI race.
But investors appeared dismayed at the impacts these plans are having on the ability of each to keep growing their core lines of business.
At first glance, the quarterly results of Alphabet, the parent company of Google, were not at all bad.
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2 other newsrooms covered this event. We read each version separately.
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