Alphabet, Google's parent company, lost just over $500bn in market value on Thursday after its quarterly update rattled investors. Google's stock hit a six-month low after the company said its AI-generated search summaries were affecting ad revenue.
Alphabet reported revenue of $127.6bn, up 25% from a year earlier. Google Cloud revenue rose 103% to almost $31bn. Profits fell 25% during the quarter, and the company reported negative free cash flow of more than $9bn, according to the BBC. The company's total stock market value fell to $3.46 trillion by the end of Thursday from $3.97 trillion the day before.
Phillip Schindler, Google's chief business officer, said on Wednesday that he felt "very good about our trajectory" with an AI-focused version of the search engine. Tracy Woo, a principal analyst at Forrester, said Alphabet's search results "highlight the challenge of funding massive AI investments while maintaining the strength of established businesses."
Amazon also reported negative cash flow, at negative $42bn, and its shares fell 6% in after-hours trading, according to the report. Chief executive Andy Jassy said the company's spending could fund opportunities that might bring in $1 trillion, but did not name the businesses. He said the spending was not spread over a longer period because "That's not the world we live in."
Microsoft's shares fell by less than 1% on Thursday. Its revenue grew 19% to $92.3bn, and its cloud business grew 30% to $63bn. Chief executive Satya Nadella said automated tasks using Copilot had nearly doubled since July.