30.10.2026 12:01
Alphabet, Google's parent company, lost more than $500 billion in market value on October 29 after announcing that AI summaries in search results were affecting advertising revenue. While shares fell about 13%, the company's market value dropped from $3.97 trillion to $3.46 trillion.
Technology giant Google's parent company Alphabet lost more than $500 billion (approximately 25 trillion lira) on Thursday, October 29.
The loss came after the company announced its final "business operations update" of 2026. Google stated that AI summaries in search results were affecting advertising revenue, and after that, investors' fears caused the stock value to fall to its lowest level in six months. Microsoft and Amazon also briefed their investors this week and announced they plan to continue heavy spending in the ongoing AI race.
GOOGLE'S AI IS UNDERMINING ITS SEARCH ENGINE
Alphabet, Google's parent company, actually reported decent quarterly results. Total revenue rose 25% year over year to $127.6 billion (approximately 6.3 trillion lira). This increase was driven by the success of Google Cloud, whose revenue grew 103% to approximately $31 billion (approximately 1.5 trillion lira).
However, the company's profits have fallen 25% recently. It also reported negative free cash flow for the second time in its history as a public company. It announced that it lost more than $9 billion (approximately 450 billion lira). As a result, Alphabet lost twice as much as it did three months earlier.
Cash flow represents the money a company has left after paying for its operations and investments. The current picture shows that Alphabet is now spending more money than it earns. Almost all of the new spending is allocated to AI investments.
On October 29, the company's total market value fell from $3.97 trillion (approximately 197 trillion lira) to $3.46 trillion (approximately 172 trillion lira). Google's search engine using AI summaries by default negatively affected advertising revenue. The bulk of Alphabet's revenue comes from ad sales that appear alongside Google search results.
Tracy Woo, a principal analyst at the research and consulting firm Forrester, said Alphabet's disappointing search engine results "highlight the difficulty of financing massive AI investments while preserving the strength of established businesses." Google's business development lead Phillip Schindler said in a statement on Wednesday that they were satisfied with the trajectory of the AI-focused search engine. On Thursday, the company's shares fell about 13%, marking their second-lowest level this year.
AMAZON'S SPENDING INCREASED SIXFOLD IN 3 MONTHS
Amazon's shares also fell on Thursday. The shares lost 6% in after-hours trading following the company's statements, which failed to satisfy investors. Although the company's quarterly sales rose 11% to $201 billion (approximately 10 trillion lira), it also reported a surprising $42 billion (approximately 2 trillion lira) cash flow. This figure shows that Amazon is not only spending more money than it earns, but also that its spending increased sixfold in three months.
Amazon CEO Andy Jassy said one of the reasons the company is making this expenditure is two separate business areas that could generate $1 trillion (approximately 50 trillion lira) in revenue for Amazon in the future. The executive did not specify which two Amazon businesses these are. However, in an interview with financial analysts, he repeatedly mentioned the financial opportunities offered by Amazon producing and selling its own computer chips, as well as its AI development platform Bedrock.
Jassy said, "One of the lessons we've learned over more than 20 years is that there is no single tool that will rule the world." He also said, "People always assume that whatever is ahead at the beginning will be the only thing people use; that is never true." When asked several times about the company's spending announcement, Jassy gave this answer: "We can finance this plan, and I think it will change Amazon's size, revenue, and free cash flow forever."
MILDER REACTION TO MICROSOFT
Wall Street reacted more mildly to Microsoft's update, and the company's shares fell less than 1% on Thursday. At the same time, the company, one of the largest investors in the AI firm OpenAI, spent about $5 billion (approximately 250 billion lira) less on AI. In addition, its announcement earlier this week of plans to lay off thousands of employees will further reduce the company's costs.
The company's revenue rose 19% year over year to $92.3 billion (approximately 4.6 trillion lira). Its critical cloud computing business grew 30% to $63 billion (approximately 3 trillion lira). Satya Nadella said that the use of the AI-powered chatbot and agent Copilot had led to "automated tasks nearly doubling since July" and daily users increasing 500% compared with a year earlier.
Usually, lower spending and rising sales receive a positive reaction from investors. However, Forrester analyst Tracy Woo said Wall Street is trying to take a longer-term view to identify companies that will actually deliver on their big AI promises. Woo also said: "Microsoft's results confirm that companies' demand for AI remains strong. But they also highlight a much bigger question facing the technology industry: Where will the value of AI ultimately lie?"
We used AI in translating this article, the original of which is in English. A BBC journalist checked the translation before publication.