Google Shares Plunge 9% on Massive AI Spending and Missed Earnings

Google's parent company, Alphabet, saw its shares drop 9% following a significant AI investment outlay of $51 billion, which deepened its cash burn and led to missed revenue and profit estimates. The search giant's core search business also underperformed expectations, contributing to the market's negative reaction.

Despite the financial setback, Google CEO Sundar Pichai stated that the company's AI investments are driving substantial growth in overall search queries, including commercial ones, reporting the highest year-over-year query growth rate. This comes as Oracle shares rallied after projecting that its AI investments will yield returns sooner than anticipated, forecasting $30 billion in free cash flow by 2029 and limiting additional data center strategy funding to $20 billion.

Meanwhile, a broader survey indicates that AI's promised cost savings are not yet materializing for most companies, with only 3% beating their cost-cutting targets, yet 85% plan to increase AI spending. This uneven impact of AI investments is further highlighted by Anthropic's launch of tools to help companies track their AI spending, as the company prepares for a planned IPO.

31 stories · 12 sources

Sources

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  2. Google says its investments in AI are driving more searches — The Verge,
  3. Oracle rallies after telling investors its AI bet will pay off sooner than expected — Financial Times - Technology,
  4. Anthropic just launched tools to show companies what their AI spending is buying — TechCrunch,
  5. The Great AI Hedge — The Atlantic Technology,
  6. Risky business? Why failure may be the new normal — Financial Times - Technology,
  7. AI's promised savings aren't materializing: Just 3% of companies beat cost-cutting targets, but 85% plan to spend more — Reddit - Technology,
  8. AI execs may be too out of touch to build for the general public — TechCrunch,
  9. Investors Brace for Big Tech’s A.I. Spending Bill — New York Times Business,
  10. Ex-City minister raises millions for insurance AI start-up i23 — Sky News Business,
  11. In China’s enterprise AI market, a specific application may be easier to sell than a platform — Reddit - Artificial Intelligence,
  12. The AI bubble already popped — in China — Financial Times - Technology,
  13. The limits of hedging the AI boom — Financial Times - Technology,
  14. Amazon Is Gutting Its AI Division After Sustained Failure — Hacker News - Official RSS,
  15. Chinese markets lose trillions as race for AI supremacy with US takes its toll — Reddit - World News,
  16. Anthropic and the AI cluster effect in fundraising — Financial Times - Technology,
  17. GM to switch listing from NYSE to Nasdaq as it accelerates AI push — Financial Times - Technology,
  18. Who Stands to Gain From an Anthropic I.P.O. — New York Times Business,
  19. Tech stocks rise as AI trade regains steam — Financial Times - Technology,
  20. Indian IT services groups turn corner as AI revenue grows — Financial Times - Technology,
  21. Where does the money for AI come from in 2027? — Reddit - Artificial Intelligence,
  22. Chinese markets lose trillions as race for AI supremacy with US takes its toll — The Guardian World,
  23. The AI boom is happening at seven companies, the rest of the S&P 500 isn't seeing it — Reddit - Technology,
  24. AI’s boost to the U.S. economy is nearing its peak, Goldman says, as Apollo finds ‘zero financial payoff’ outside Big Tech — Reddit - Technology,
  25. Why you shouldn’t bother reading the Anthropic IPO filing — Financial Times - Technology,
  26. Meta plans $95 billion stock offering to fuel AI spending despite growing bubble fears — Reddit - Technology,
  27. Meta stock sinks nearly 7% as AI spend pushes free cash flow negative — Reddit - Technology,
  28. In China, the AI bubble has already burst — Reddit - Technology,
  29. Anthropic unveils details of planned historic stock market debut — BBC Business,
  30. Musk Is Predicting ‘Guppy-level Death’ for Scores of A.I. Companies — New York Times Business,
#google #ai-investment #earnings

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