Big Tech Loses Nearly $900 Billion on AI Doubts
Amazon shares fell 7% and Intel fell 25% in premarket trading Friday, extending a weekly rout that has erased nearly $900 billion in Big Tech market value, with Alphabet losing $500 billion.
Amazon shares dropped 7% and Intel fell 25% in premarket trading Friday after both companies reported earnings that disappointed investors, CNBC reported. The declines deepened a selloff that has wiped out nearly $900 billion in Big Tech market value this week.
Alphabet accounted for just over $500 billion of those losses. The Google parent’s stock fell almost 13% Thursday, its second-lowest showing this year, after the company said AI-generated summaries on its search engine were cutting into ad revenue, according to BBC World. By the end of Thursday, Alphabet’s market value stood at $3.46 trillion, down from $3.97 trillion a day earlier, and its shares touched a six-month low.
The results sharpened investor doubts about whether the enormous sums Big Tech companies are pouring into artificial intelligence will generate returns. Globally, Asian shares and U.S. futures were mixed Friday and oil prices fell, AP reported, with the weak Alphabet results weighing on technology stocks ahead of the U.S. open.
The context
On paper, Alphabet’s quarter was not weak across the board. Total revenue grew 25% year over year to $127.6 billion, lifted by Google Cloud, where revenue roughly doubled to almost $31 billion, BBC World reported. But profits fell 25% during the quarter, and the company posted negative free cash flow of more than $9 billion — only the second time in its history as a public company, and nearly double the cash loss it reported three months earlier. That spending is almost entirely tied to AI investments. Google’s search engine now defaults to AI summaries of queries, which reduced the number of ads it could sell during the quarter — a problem because search advertising is the vast majority of Alphabet’s business. Microsoft and Amazon also updated investors this week and, like Google, said they plan to keep spending heavily in the AI race. Google CEO Sundar Pichai has backed the company’s AI spending, and chief business officer Phillip Schindler said Wednesday he felt “very good about our trajectory” with an AI-focused search engine.
Why it matters
A near-$900 billion decline across companies including Alphabet, Amazon, Meta and Intel reaches directly into U.S. retirement accounts that hold these widely owned stocks. The selloff also marks the first serious market reckoning with the AI capital spending boom: investors appear dismayed that the race to fund AI is straining the core businesses that pay for it. As Forrester analyst Tracy Woo put it, Alphabet’s search results highlight the challenge of funding massive AI investments while maintaining established businesses. If that doubt persists, it could reshape how markets value the sector.
What’s next
The immediate question is how Amazon and Intel shares trade through Friday’s U.S. session after their premarket declines, and whether the broader tech selloff extends or stabilizes. Investors will also watch whether Alphabet, Microsoft and Amazon adjust their AI spending plans, and whether Google’s AI-focused search can offset the ad revenue pressure its AI summaries have created. None of the companies has announced changes to its capital spending plans in the material available.
Sources
Google value plunges by $500bn as AI search hits ad sales
Alphabet stock hit a six-month low after revealing AI search summaries are cutting into ad revenue, spooking investors.
Amazon falls 7%, Intel plunges 25% in premarket trading, as pressure mounts after earnings
Investors punished Amazon and Intel after earnings amplified doubts that massive AI capital spending will pay off.
Asian shares and U.S. futures are mixed and oil prices fall
Global markets wobbled as weak Alphabet results and AI-spending fears dragged down big technology stocks ahead of Friday’s open.
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