Google faces a $400 billion stock wipeout after disappointing earnings
Alphabet, which owns Google, saw its shares tumble after earnings missed estimates.
The short version
- The stock was set to drop 10.5 percent on Thursday morning.
- AI search queries grew fast but brought in less money than expected.
- Google is now rushing to add ads to AI search.
Why it matters to you. For investors watching tech stocks, it is a reminder that even the biggest giants have to prove artificial intelligence can pay the bills.
Check your portfolio today. Alphabet, which owns Google, is facing a record stock wipeout after reporting that its new artificial intelligence search features are not making as much money as expected. According to Business Insider, the company's shares tumbled 10.5 percent on Thursday morning, wiping more than $400 billion from its market value.
Sundar Pichai, the CEO of Alphabet, told investors on an earnings call that AI helped search queries grow at the fastest year-over-year pace in five years. But third-quarter search revenue hit $63 billion, coming in below Wall Street estimates and up just 1 percent from the previous quarter.
Philipp Schindler, Google's chief business officer, explained that strong growth in AI mode queries had an impact because of lower monetization. The rise of generative AI has shaken up Google's core business as chatbots like ChatGPT and Claude give people an alternative way to search.
While Google has integrated its Gemini chatbot into search, revenue is lagging behind its massive popularity. To fix that, Google is now introducing ads into AI mode for more users worldwide. If the stock holds its losses, it will mark the company's worst earnings reaction day since Google went public in 2004.
Photo: Austin McKinley, CC BY 3.0, via Wikimedia Commons
