Google’s share price has dramatically plunged amid a panic over AI.
asserted
price → plunge → AI
Parent company Alphabet finished Thursday down more than 12 per cent, wiping $500 billion from its value.
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company → finish → value
It represents the biggest ever crash in Google’s history, and second only among US listed companies to a $593 billion plunge in Nvidia’s value last year, after the rise of China’s DeepSeek AI brought concerns that US artificial intelligence companies could lose the race.
uncertain
companies → represent → race
It comes after Alphabet’s latest results showed disappointing earnings in its search advertising business and the full scale of its vast spending on artificial intelligence.
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results → come → intelligence
But shareholders are concerned that those huge bets may not come off, and that the company and the rest of the tech industry may not recover its investment in AI.
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company → concern → AI
The results did show that Google is already earning from the AI boom, with revenues in its cloud business more than doubling.
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revenues → show → business
But investors are concerned that in the search business that still represents a large part of its earnings, Google is yet to see its embrace of AI results turning into profit.
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embrace → represent → profit
Google and its chief executive Sundar Pichai have looked to aggressively embrace AI, after a relatively slow start against other companies such as OpenAI.
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Google → look → OpenAI
It has begun to use its Gemini model to answer many search queries, for instance – despite the fact that advertising in search results has been a reliably huge business for parent company Alphabet.
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advertising → begin → Alphabet
"In a market worried about AI cannibalising the franchise, investors need to see search accelerating, not decelerating," said Dave Wagner, portfolio manager at Aptus Capital Advisors.
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Wagner → worry → Advisors
"Cloud is carrying the story, but until search shows AI is additive, the stock's probably going to trade lower."
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stock → carry → story
The Mountain View, California company reported negative free cash flow of $9.1 billion, versus analyst expectations that it would come close to breaking even.
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it → report → expectations
Aggressive efforts to boost cloud capacity and fund AI development led Alphabet to burn $5.9 billion last quarter, the first time it went into the negative in 22 years as a public company.
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it → boost → company
Total revenue missed Wall Street targets: revenue growth for Google Cloud outpaced expectations but was not enough to offset a $1.4-billion miss in advertising.
Alphabet's second straight quarter of negative cash flow was a sharp turn for a company that was long one of the tech sector's most prolific cash generators.
Moreover, Alphabet still plans to significantly increase its 2027 capital expenditures from this year's spending forecasts of $195 billion to $205 billion, Chief Financial Officer Anat Ashkenazi told analysts on a conference call.
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Ashkenazi → miss → call
While executives did not put a number on 2027 outlays, investors were nervous about a big jump.
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investors → put → jump
"A $300-billion (capex) number could potentially scare the market because free cash flow now is finally negative," said Jeremy Saltsburg, senior investment officer at Check Capital.
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Saltsburg → scare → Capital
In contrast, rival Microsoft, which also reported results on Wednesday, saw shares rise more than 5%, fueled by positive free cash flow that outstripped analyst estimates.
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that → report → estimates
Ashkenazi added that she expected near-term margin pressure from the use of third-party cloud capacity.
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she → add → capacity
Net income available to common Alphabet shareholders fell 25% to $26.17 billion, and adjusted earnings per share of $2.67 missed Wall Street targets of $3.02.
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earnings → fall → 3.02
The results reflect the huge costs of the AI buildout, with investors concerned both by potential overspending and the risk of falling behind rivals by not spending enough.
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investors → reflect → enough
Total third-quarter revenue of $127.6 billion fell short of analysts' estimate of $128.2 billion, LSEG data showed.
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data → fall → billion
Revenue from ads came in at $82 billion, missing expectations of $83.4 billion.
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Revenue → come → billion
Chief business officer Philipp Schindler attributed a larger-than-expected deceleration in search advertising growth to greater use of AI Mode, a chatbot interface for the search engine with which the company is still experimenting on ads.
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company → attribute → ads
Google would begin rolling out advertisements in AI Mode to international markets, Schindler told a conference call.
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Schindler → begin → call
Alphabet attempted to offset the disappointing advertising performance by playing up its cloud computing unit, most notably by debuting Thomas Kurian, CEO of GoogleCloud, as a speaker on the earnings call.
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Alphabet → attempt → call
Revenue at Google Cloud exceeded estimates and more than doubled to $30.71 billion in the third quarter ended September 30.
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Revenue → exceed → quarter
Kurian said sales of Google's tensor processing units (TPUs), which compete with Nvidia's GPU chips, had become a meaningful contributor to his business unit.
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which → say → unit
Alphabet started recognizing revenue from direct sales of what it called its "TPU Systems", spanning not only the chips but also associated hardware and software, last quarter.
But Ashkenazi cautioned that the buildout of TPU inventory would further place pressure on free cash flow.
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buildout → start → flow
Google Cloud's backlog had grown to $561 billion and Alphabet expected to recognize more than 55% of it as revenue in the next 24 months, she added.
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she → grow → months
The third-largest cloud services provider globally after Amazon Web Services and Microsoft's Azure, Google Cloud has expanded enterprise commitments, supported by multi-year cloud and AI infrastructure deals across cybersecurity, retail and financial services.
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Cloud → expand → cybersecurity
Alphabet, Microsoft, Amazon, and Meta are projected to collectively spend well over $700 billion in 2026 to expand AI data center footprint, chips and high-performance networking capacity.
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Alphabet → project → footprint
In the face of supply bottlenecks for advanced silicon and data center power, Alphabet's investments in custom tensor processing units alongside third-party GPUs have helped expand its service delivery capabilities.
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investments → help → capabilities
Earlier on Wednesday, Google sought to preempt the results and counter a perception of losing out in the AI race by unveiling the new Gemini 4 Carbon model.
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Google → seek → model
This meant the company was again "leading at the frontier," CEO Sundar Pichai said on the call.
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Pichai → mean → call
Afterwards, analysts at Bernstein asked in a note, "Did Google rush the deployment of Gemini 4 models as an offset to softer financial metrics?
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Google → ask → metrics
The Aporia
