Google value plunges by $500bn as AI fears rattle Wall Street

Image source, EPAImage caption, Google CEO Sundar Pichai has backed the company's massive spending on AI.ByKali HaysTechnology reporterPublished29 October 2026, 21:29 GMTUpdated 6 minutes agoGoogle parent Alphabet lost just over $500bn (£374bn) in value on Thursday after it rattled Wall Street with its last update of the year on its business operations.Google spooked investors so badly that its stock hit a six-month low, after it revealed its artificial intelligence (AI) summaries on search were affecting ad revenue. Microsoft and Amazon also updated investors this week, and joined Google in plans to keep spending astronomical sums of cash in an ongoing AI race. But investors appeared dismayed at the impacts these plans are having on the ability of each to keep growing their core lines of business.Google AI is eating its core business - searchAt first glance, the quarterly results of Alphabet, the parent company of Google, were not at all bad.Total revenue grew 25% compared to last year, hitting $127.6bn. It was buoyed by the ongoing success of Google Cloud, where revenue grew by 103% to almost $31bn.However, profits at the company fell by a considerable 25% during the quarter. And for the second time in its history as a public company, it showed negative free cash flow, this time in excess of $9bn. That's almost twice the loss of cash Alphabet showed just three months ago.Cash flow represents the money a company retains after paying for operations and investments, meaning Alphabet is now spending more money than it is bringing in. That new level of spending is almost entirely dedicated to Google's AI investments.By the end of Thursday, the company's total stock market value had fallen to $3.46 trillion from $3.97 trillion the day before.Google's omnipresent search engine now defaults to AI summaries of a person's query, and that hit the number of advertisements it was able to sell during the quarter. The sale of ads that appear alongside Google Search results is the vast majority of Alphabet's business.Tracy Woo, a principal analyst at Forrester, said Alphabet's disappointing search business results "highlights the challenge of funding massive AI investments while maintaining the strength of established businesses."Although 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, the company's stock fell by almost 13% on Thursday, its second lowest showing this year.Investors not buying Amazon's trillion-dollar business hopesAmazon's stock also took a hit on Thursday after it shared results that disappointed investors. Shares of the company fell 6% in after hours stock trading.Alongside quarterly sales growth of 11%, hitting $201bn, the company shared a staggering cash flow figure of negative $42bn.That number shows that Amazon is not only spending more money than it makes, but that spending has increased six-fold over the span of three months.Chief executive Andy Jassey claimed the business was spending in part because it had the chance at, not one, but two businesses that could end up bringing in $1 trillion for Amazon the future."There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years."Jassy did not specify what two Amazon businesses those may be.Related topicsGoogleAlphabetMicrosoftAmazonArtificial intelligenceStock markets