Alphabet loses over $500bn in value as AI costs and ad sales worry investors
Alphabet shares fell nearly 13% on Thursday, cutting its market value to $3.46 trillion from $3.97 trillion. Anadolu Agency reported that AI search summaries are denting its core advertising sales.
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- Alphabet shares dropped nearly 13% to a six-month low on Thursday
- Market value fell to $3.46 trillion from $3.97 trillion, according to Anadolu
- Free cash flow turned negative because of AI investment
- Amazon and Intel shares also fell on weak results
Alphabet, the parent company of Google, lost more than $500 billion in market capitalization on Thursday, according to Anadolu Agency. The fall followed its quarterly results, which showed that Google's default AI summaries of search queries are reducing advertising sales.
Anadolu reported that Alphabet shares dropped nearly 13% to a six-month low. That cut the company's total market valuation to $3.46 trillion from $3.97 trillion. CNBC reported the stock fell more than 12% to $285 after the third-quarter report, and that the bottom of its 52-week range is $270.70.
The results were mixed. Anadolu said quarterly revenue grew 25% year-on-year to $127.6 billion, but net profit fell 25%. Free cash flow turned negative, with outflows of more than $9 billion linked to investment in AI. CNBC reported that cloud revenue rose 103%, while earnings per share of $2.12 missed an estimate of $3.02.
CNBC also reported that several firms downgraded Alphabet, cut price targets or lowered forward estimates after the report. BBC headlines described the move as part of a wider fall in US tech stocks driven by concerns over AI costs.
Other technology companies were also under pressure. According to CNBC, Amazon shares fell more than 7% in premarket trading on Friday after earnings missed forecasts on earnings per share and revenue, despite the fastest growth in its AWS cloud unit in five years. Anadolu said Amazon's sales rose 11% to $201 billion, with free cash flow of negative $42 billion.
CNBC reported that Intel shares fell about 25% in premarket trading after weaker fourth-quarter guidance. Intel CFO David Zisner said: "we see the PC slowdown continuing at least through the first half of next year." Reddit shares fell more than 20% after its chief executive warned that daily unique visitors could fall by a double-digit amount in the fourth quarter.
CNBC said Alphabet shares were flat in premarket trading on Friday after Thursday's loss.
Why it matters
Pakistani investors who follow global markets alongside the PSX may watch such swings in major tech stocks. The reports link the fall to AI spending costs and weaker advertising sales.
