Alphabet lost just over $500bn (£374bn) in market value on Thursday, causing its total stock market value to drop from $3.97 trillion to $3.46 trillion.
Shares of the company fell by almost 13% during the session, reaching a six-month low. Total revenue for Alphabet grew 25% year-on-year to reach $127.6bn, while Google Cloud revenue surged 103% to nearly $31bn. Profits for the firm declined by 25% during the quarter, and the company reported negative free cash flow exceeding $9bn.
Tracy Woo said Alphabet's disappointing search business results "highlights the challenge of funding massive AI investments while maintaining the strength of established businesses." Google's search engine now defaults to AI summaries of a person's query, a move that has been affecting ad revenue.
Phillip Schindler said he felt "very good about our trajectory" with an AI-focused version of the search engine. Amazon's shares dropped 6% in after-hours trading on Thursday following the disclosure of quarterly sales growth of 11%, reaching $201bn. The company shared a cash flow figure of negative $42bn, with spending increasing six-fold over the last three months.
Amazon's AI developer platform Bedrock provides paying users with access to most major AI models and tools. Andy Jassy said the business was spending in part because it had the chance at, not one, but two businesses that could end up bringing in $1 trillion for Amazon the future.
Jassy added that it "would be more convenient" if the spending were spread over the next 25 years, but he believes the plan will forever change the size, revenue, and free cash flow of Amazon. Microsoft's shares fell by less than 1% on Thursday as the company's revenue grew 19% from a year earlier to hit $92.3bn for the quarter.
The cloud business of Microsoft grew by 30% to $63bn, while the company spent around $5bn less on investments dedicated to AI. Microsoft, which is one of OpenAI's largest investors, revealed plans earlier this week to cut thousands of workers.
Satya Nadella said the use of Copilot, Microsoft's AI chatbot and tool, has seen "automated tasks nearly double since July." Daily users for Microsoft grew by 500% from a year ago.
Woo said Microsoft's results reinforce that enterprise demand for AI remains strong, but they also highlight a much bigger question facing the technology industry, where AI value will ultimately be captured.
