Google also reported higher operating expenses and negative free cash flow as it increased spending on data centers and AI models|Open Grid Scheduler
Alphabet lost nearly $500 billion in market value on Thursday as Google shares plunged 13%, marking their steepest single-day decline on record.
The sharp fall came as investors worried that rising artificial intelligence costs and changing online search habits could threaten the tech giant’s long-standing growth and profitability.
These concerns followed Alphabet’s latest earnings report, which showed that Google Services revenue reached $96.3 billion, below analysts’ expectations of $98.5 billion.
Search revenue grew 12% in the third quarter, down from 17% in the previous quarter, indicating slower growth.
Alphabet also reported higher operating expenses and negative free cash flow as it increased investment in data centers and AI models.
The company spent $51.4 billion on capital expenditure in the third quarter alone to expand its AI infrastructure.
Meanwhile, AI chatbots are changing how people search for information, putting pressure on Google’s advertising-driven business model.
In response, Google is stepping up advertising in AI-powered search to protect its core revenue stream.