Alphabet Loses $500bn as AI Weighs on Search Advertising
Alphabet lost just over $500bn in market value on Thursday after it said AI summaries in search were hurting advertising revenue. Its shares fell almost 13% to a six-month low. Revenue rose 25% to $127.6bn, but profits fell 25% and free cash flow turned negative by more than $9bn. Amazon fell 6% after hours.
Forrester’s Tracy Woo said the results “highlight the challenge of funding massive AI investments while maintaining the strength of established businesses”. Google Cloud revenue rose 103% to almost $31bn, but search ads remain the bulk of the business. Amazon reported free cash flow of minus $42bn. NBC News says the loss ranks second only to Nvidia’s $589bn drop in January 2025 as the largest one-day wipeout in US market history. In London, the FTSE 100 had closed 0.26% higher, helped by Shell. For investors, the question is no longer whether big tech will spend on AI, but whether the spending is eroding its core businesses.