The market capitalization of Google parent company Alphabet suffered a historic blow on October 29, shedding more than $500 billion in value. Investor anxiety has reportedly reached a boiling point over the astronomical capital being funneled into artificial intelligence and the disruptive impact that new search functionalities are having on the European and US tech giant's core advertising revenue model. Consequently, company shares plummeted by nearly 13% during the session.

According to reports from BBC, Alphabet’s valuation at the close of trading dropped from $3.97 trillion down to $3.46 trillion, pushing stock prices to their lowest levels in six months. Analysts indicate that the core of investor unease lies in Google's primary profit generator—search advertising. With AI-generated answers increasingly dominating search results, observers claim that the European-backed tech titan's traditional ad-selling capabilities are facing unprecedented headwinds as management struggles to secure stable monetization for the new technology.

Financial reports show that while Alphabet’s overall top-line revenue allegedly continues to grow—reaching $127.6 billion in the third quarter, up 25% year-on-year—the bottom line tells a more troubling story. Net income dropped sharply from nearly $35 billion to $26.5 billion. Furthermore, aggressive capital expenditures pushed free cash flow into a negative territory of approximately $9.1 billion, as investments heavily outpaced the cash generated by core operations.

The contagion of AI-related spending fears quickly spread across the US market, dragging down Amazon shares by roughly 6% after hours following reports of surging infrastructure costs and negative free cash flow. Market experts suggest that institutional investors are growing increasingly skeptical, shifting their scrutiny from mere technological adoption rates to questioning when and how these multi-billion-dollar bets will actually materialize into verifiable financial returns.

Source: kun.uz