Alphabet shares plunge as AI costs and lower profits rattle Wall Street
Alphabet lost over $500 billion in market value as lower profits, slowing ad growth, and heavy spending on artificial intelligence unsettled investors.
Alphabet's market capitalization fell by over $500 billion on Thursday after the Google parent company reported lower-than-expected third-quarter profits and a deceleration in advertising revenue. Shares dropped more than 12% in early trading following a 25% year-on-year decline in net profit to $26.2 billion.
Investors expressed concern that heavy capital expenditure on artificial intelligence is failing to generate matching revenue growth. Additionally, the integration of AI-generated summaries into search results contributed to pressure on advertising income. The drop impacted broader equity markets, with major US indexes trading lower as tech shares faced selling pressure. Similar earnings updates and high AI spending plans from tech peers, including Amazon and Intel, accelerated market volatility across the sector.
Sources: The Guardian, BBC News, Sweden Herald, Daily Sabah, Bloomberg.