Alphabet's market value plunges $500B as AI search hits ad revenue
- Google parent's shares drop nearly 13% to 6-month low amid rising AI infrastructure costs and negative cash flow
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- Google parent's shares drop nearly 13% to 6-month low amid rising AI infrastructure costs and negative cash flow
By Gokhan Ergocun
ISTANBUL (AA) - Google parent Alphabet lost over $500 billion in market capitalization on Thursday after revealing that artificial intelligence (AI) search summaries are denting its core advertising sales.
Alphabet's shares dropped nearly 13% to a six-month low, reducing its total market valuation to $3.46 trillion from $3.97 trillion.
Although quarterly revenue grew 25% year-on-year to $127.6 billion, net profit plunged 25%, and free cash flow turned negative, exceeding $9 billion in outflows due to surging AI investments.
Google's default AI summaries of users' search queries reduced advertising sales, which generate the vast majority of the company's revenue.
Amazon shares also fell 6% in after-hours trading after the retailer posted an 11% rise in sales to $201 billion alongside negative free cash flow of $42 billion.
Gökhan Ergöçün