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At present, the biggest and shocking sensational news in the world of technology sector is coming out from the global financial markets and corporate world. Search engine giants are among the world’s largest and most powerful tech companies. Google parent company of Alphabet Inc. Suddenly there was such a huge earthquake in the shares that the market got scared. Alphabet shares surge in just 5 minutes of trading on Wall Street Big fall of more than 13 percent Was recorded. Due to this historic crash, the market capitalization of the company declined rapidly. More than Rs 48 lakh crore was stolen It’s done. In the latest quarterly results released by the company, declining profits and indiscriminately increasing expenditure on Artificial Intelligence (AI) have greatly increased the concerns of investors. Let us know in detail what is the real reason behind this unprecedented earthquake in Alphabet’s shares and what effect it has seen on Wall Street.
Alphabet’s third quarter earnings did not meet Wall Street’s expectations
Alphabet, one of the world’s most prominent and giant companies in terms of market cap, has recently presented its financial results for the third quarter of the current financial year (Q3 Earnings) to the world. But these figures of the company did not fully meet the expectations of investors and market analysts, due to which there was a huge flood of selling in the shares.
According to data shared by the company, Alphabet made a total of Rs. Revenue of $127.6 billion Have registered. Although this figure is about 25% more than the same period last year, it is slightly less than the estimated figure of $ 128 billion by leading financial analysts of Wall Street. Furthermore, the net income of the company i.e. Huge decline of 25% in net income Has been seen. In the same quarter last year, the company’s net income was $34.98 billion, which has come down to $26.17 billion this time. This sudden slowdown in earnings and decline in profits has dealt a major blow to investor confidence.
Shares fell by more than 13% in just 5 minutes, the biggest loss in market value in history.
The massive selling seen in Alphabet’s shares as soon as the trading session started broke all previous records. Despite better-than-expected US economic growth data, Alphabet shares gave investors sleepless nights.
Alphabet’s shares fell within five minutes of the start of trading. Plunging 13.2% to $279.43 Came to the level of. When shares fell 13% to $281.37 in early morning trading in New York, the company’s total market value Shortage of more than 500 billion dollars (about Rs 48 lakh crore) Was recorded. This is believed to be the largest and most devastating single-day loss in Alphabet’s market capitalization in corporate history, causing panic in the US stock market.
Increasing expenditure on Artificial Intelligence (AI) increases investors’ concerns
The main and biggest reason behind this historical decline is by Alphabet. Artificial Intelligence (AI) Infrastructure There is huge capital expenditure. There is currently a race in the tech world to be at the forefront in the AI race, and Google also does not want to be left behind in this.
The company’s capital expenditure increased in the quarter under review. 51.4 billion dollars It has reached Rs. 10,000, which is more than double the expenditure incurred in the same period last year. The company has made this huge investment in developing its new data centres, state-of-the-art computing infrastructure and powerful AI chips. Due to this huge investment, the September quarter became the second consecutive quarter after the June quarter when the company’s free cash flow negative were recorded. Alphabet maintained its capital spending forecast of $195 billion to $205 billion for 2026, and the company’s CFO Anat Ashkenazy indicated that this spending will increase further in 2027 as the company continues to expand the scope of its AI network.
Growth slows down in search and advertising business, investors’ confidence decreases
Not only the expense of AI, but also the main business pillars of Google. Search Advertising The pace of business has also seemed to be slowing down, which has disappointed investors.
Revenue from Google search and other ads increased by 12% year-on-year 63.35 billion dollars definitely reached, but it was much less than the 17% growth recorded in the previous quarter. Additionally, popular video platforms YouTube’s advertising revenue increased by 9% to $11.21 billion Due to which Google’s total advertising revenue increased to $ 82.01 billion. Analysts believe that while on one hand Google is facing tough competition from new technology companies and AI chatbots in the search market, on the other hand the billions of dollars spent on AI are putting huge pressure on the company’s profits. This is the reason why investors have started staying away from this stock, due to which Alphabet has suffered a big financial blow.