Value of Google parent Alphabet plunges by $500bn as AI fears rattle Wall Street
Alphabet's market value dropped by $500 billion after investors reacted negatively to high AI spending and its impact on search ad revenue. Despite strong growth in Google Cloud, the company's overall profits fell as it prioritizes long-term AI investments.
Why it matters
This reflects the growing tension on Wall Street between the massive capital expenditure required for AI and the immediate profitability of core tech business models.
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.
Headlinne story · 7 newsrooms
Alphabet Shares Plunge After Earnings Miss Revives Artificial Intelligence Spending Anxieties
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