Friday: Google parent suffers massive stock loss, Amazon faces high AI costs

Alphabet's biggest stock drop ever

On Thursday, shares of Alphabet, the company behind Google, fell by about 12.5 percent. The company lost roughly half a trillion dollars in market value. Investors quickly sold the stock after the company's latest quarterly results. The results showed that Alphabet is spending a lot on AI and will spend even more this quarter on AI data centers.

Key numbers

• Alphabet's stock fell about 12.5 percent in one day.
• The company lost roughly half a trillion dollars (500 billion) in market value.
• This was the biggest drop in Alphabet's history.
• The drop was bigger than the losses during the COVID-19 pandemic in 2020 and the 2008 financial crisis.

Amazon grows, but investors are worried

Amazon earned more than a year earlier, and its cloud business AWS grew strongly. But online shopping grew less than expected, and the Prime Day sale moved into the previous quarter. Amazon is also spending huge sums on data centers for AI. This makes its free cash flow, the money left after paying for running and growing the business, fall deep into negative billions. Amazon's shares fell a little.

Why this matters

The stories show that big tech companies are spending huge amounts on AI. Investors are now asking when this spending will pay off. When AI costs rise faster than profits, stock prices can fall fast, even for very large companies.

Patrick Stewart

Patrick Stewart, a British actor, died on Wednesday at age 86. He was known for Shakespeare plays and for playing Captain Jean-Luc Picard in Star Trek and Professor Charles Xavier in the X-Men films. He is survived by his widow, singer Sunny Ozell, and two children from an earlier marriage. The article says he suffered from Alzheimer's and dementia in his later years.