Google lost $500 billion in market value in a single day
The market value of Alphabet, the parent company of Google, dropped by more than $500 billion on October 29. Huge spending on artificial intelligence and the impact of new search features on the advertising business worried investors. The company's shares fell by nearly 13 percent.
Google loses $500 billion in market value in a single day
Share prices fell to their lowest level in the last six months. This loss shows how much the company's total market capitalization has decreased.
Investors' anxiety is linked to one of Google's main revenue sources — search advertising. AI-generated answers are increasingly being displayed in search results. Along with developing the new technology, Google also needs to resolve the issue of generating stable revenue from it.
At the same time, Alphabet's overall revenue continues to grow. According to the official report, third-quarter revenue increased by 25 percent compared to the same period last year, reaching $127.6 billion. Revenue from Google Cloud services grew by 103 percent to $30.7 billion.
Revenue from search and related services also grew by 12 percent. This means that the problem in this segment is not an absolute decrease in revenue, but rather the growth rate and the expected revenue from new artificial intelligence features. Meanwhile, the company's net profit fell from nearly $35 billion to $26.5 billion.
Heavy investments are also putting pressure on cash flow. Alphabet generated $42.3 billion in cash flow from operating activities in the third quarter, while spending $51.4 billion on capital expenditures for property and equipment. As a result, free cash flow was negative by nearly $9.1 billion — meaning these investments exceeded the cash generated by core operations.
Concerns over AI spending also affected Amazon shares, which dropped by about 6 percent in after-hours trading. According to the company's official report, quarterly revenue rose 12 percent to $201.9 billion. However, free cash flow for the 12 months ending in late September was negative at $42.4 billion. Amazon explained this primarily by increased investments in AI infrastructure.
The decline in Microsoft shares was less than 1 percent. The company's quarterly revenue rose 19 percent to $92.3 billion. Analysts interviewed by the BBC note that investors are now evaluating not only how much AI usage has grown, but also when and how these massive investments will yield financial results.