Google, Reddit, and more tech stocks plummet: What’s driving market shocks
Google and Reddit stocks are tanking. The reasons why are linked. Here's what's happening in the markets.
On Thursday, Google's stock hit its largest single-day drop ever, followed by Reddit's potential worst day on Friday. Intel also saw a 30 percent drop. The driving force behind these market shocks is AI. During a Q3 earnings call, Google reported strong revenue growth, but in a filing, they revealed higher-than-expected exposure to AI risk.
Google has disclosed $1 trillion in future purchase commitments and an additional $98 billion in possible commitments, mainly for AI data centers and computing power. This heavy reliance on AI puts significant pressure on Google's financial performance. Moreover, Google's AI features are impacting its primary revenue source, Google Search advertising.
Fewer users are clicking on ads due to AI tools, and Google Search revenue is slowing despite increased search queries. Similarly, Reddit's traffic, which was 50% from Google, has dropped significantly due to Google's AI Overviews. In response, Reddit plans to require user accounts and logins to view content, further reducing traffic.
The tech industry's rapid integration of AI into various products and services has led to negative consequences for established businesses.
Written by urgent.news from Mashable's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
