Economy

Google Value Plunges by $500bn as AI Search Hits Ad Sales

AI SUMMARY

Google parent Alphabet lost over $500bn in market value after AI-driven search changes impacted ad sales and lowered company profits.

Alphabet's market value fell by just over $500bn on Thursday, dropping from $3.97 trillion to $3.46 trillion.
Total revenue grew 25% year-on-year to reach $127.6bn, driven by Google Cloud revenue surging 103% to nearly $31bn.
Company profits fell by 25% during the quarter.
Alphabet reported a negative free cash flow in excess of $9bn, which is nearly double the cash loss from three months prior.
Google's search engine defaulting to AI summaries reduced the number of advertisements the company was able to sell.
Google's stock fell by nearly 13% on Thursday, marking its second-lowest showing of the year.
Amazon and Microsoft also updated investors on plans to maintain high spending in the ongoing AI race.
Amazon's stock fell 6% in after-hours trading following investor-disappointing results showing spending had increased six-fold over three months.
Amazon CEO Andy Jassy defended the spending by pointing to future financial opportunities in making and selling its own computer chips and its Bedrock AI platform.