Alphabet’s market value tumbled by just over $500 billion after the company said AI-generated search responses are denting its core advertising business. The stock fell more than 12% to a six-month low as investors balked at a softer-than-expected ad performance, despite 25% revenue growth to $127.6 billion in the September quarter. Chief Business Officer Philipp Schindler acknowledged that Google’s conversational “AI mode” is cannibalizing traditional search ads, while executives argued the shift is a necessary long-term bet. The rout pulled Alphabet’s valuation down to $3.46 trillion from $3.97 trillion. The selloff rippled across Big Tech: Amazon shares slid after-hours as heavy AI and infrastructure spending drove negative $42 billion in cash flow despite 11% sales growth to $201 billion, while Microsoft—spending billions less on AI and trimming headcount—reported 19% revenue growth to $92.3 billion and a 30% surge in cloud, prompting a more muted market reaction. Investors remain focused on whether hefty AI investments can expand profits without eroding incumbents’ core businesses.
Related articles:
Alphabet Inc.
Google Search
Online advertising
Cloud computing
Amazon Web Services
