Kathmandu, October 30
Alphabet, the parent company of Google, has lost more than $500 billion in market value in a single day.
Alphabet’s share price fell to a six-month low on Thursday, as Wall Street investors were disappointed by the company’s latest quarterly business report. Investors grew worried after the company disclosed that AI-generated summaries in Google Search are affecting its advertising revenue.
Microsoft and Amazon also released their business results this week. All three tech giants have announced plans to invest heavily in the AI race.
However, investors appear concerned about how this massive spending on AI will affect the growth and earning power of the companies’ core businesses.
AI challenges Google’s core search business
At first glance, Alphabet’s quarterly financial results do not look weak. The company’s total revenue rose 25 percent from the same period last year to $127.6 billion.
The expansion of Google Cloud contributed significantly to this growth. The company said the business’s revenue grew 103 percent to nearly $31 billion.
Despite the rise in revenue, however, the company’s profit fell sharply. Alphabet’s profit declined by 25 percent in the quarter under review.
Alphabet also reported negative free cash flow for the second time since becoming a public company. This time, its free cash flow was negative by more than $9 billion, which is nearly double the figure from three months ago.
With heavy investment in AI technology and its effects now visible in the search business, Google’s main source of income, investors have begun to question the company’s future earning power.
