Shares of Alphabet, the parent company of Google, crashed 13% in Thursday’s trade on October 29, falling to an intraday low of $280 apiece, as Wall Street was disappointed with the company’s September-quarter performance, particularly in its core search advertising business, while its cash burn extended into the second quarter.
If sustained through the close, the decline would mark the stock’s worst single-day drop since it began trading more than 20 years ago. Google and other hyperscalers have been burning cash to build AI infrastructure, and the results have underscored concerns over whether their massive investments in artificial intelligence (AI) technology will pay off.
Concerns are mounting that the AI revolution may not deliver the levels of profitability and productivity gains investors had hoped for. Future spending is also facing scrutiny amid rising borrowing costs and the growing expense of building AI infrastructure.
Alphabet is one of the most influential stocks on Wall Street, and its sharp decline also dragged the Nasdaq Composite down 1.4% to its intraday low.
The company behind Google and YouTube said late Wednesday that it had burned through more cash during the latest quarter, as measured by free cash flow, after its purchases of property and equipment exceeded $51 billion.