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

Alphabet's Google experienced a significant drop in value, losing over $500 billion (£374 billion) after its year-end update raised concerns among Wall Street investors. The search engine giant's stock fell to a six-month low following the revelation that its AI-powered search summaries were negatively impacting ad revenue. Microsoft and Amazon also disclosed their financials this week, all aiming to maintain their hefty investments in AI development.

While Alphabet's revenue grew by 25% to $127.6 billion, profits declined by 25% and the company faced its second negative cash flow in history, totaling over $9 billion. The company's market value plunged to $3.46 trillion. Google's AI features are now the default in search results, leading to a decline in advertisements sold. Despite assurances from CEO Sundar Pichai, the company's stock dropped by almost 13%.

Amazon's stock also suffered a 6% decline after reporting disappointing results, including a negative cash flow of $42 billion. Amazon's CEO, Andy Jassy, revealed plans to invest in two potential billion-dollar ventures, including the development of advanced computer chips and its AI platform, Bedrock. Microsoft, another major player in the AI race, saw a slight decrease in shares following its report, with revenues growing 19% to $92.3 billion and its cloud business expanding by 30% to $63 billion.

However, the company's focus on AI investments and workforce reductions led to investor skepticism about the ultimate value of AI in the technology industry.