Google Faces Historic Stock Drop as AI Slows Ad Revenue Growth
Google's stock is falling over 11% in pre-market trading Thursday after disappointing quarterly results, potentially marking its worst post-earnings day since its 2004 stock market debut and a loss of nearly $400 billion in market value. Revenue grew 25% in the third quarter with net profit at $26.17 billion, boosted by strong cloud performance. However, advertising division growth slowed to 12% annually, below analyst expectations of $98.5 billion in revenue, as AI-powered search queries monetize less effectively than traditional searches. Capital expenditures on AI reached $51.4 billion, causing a $9.1 billion cash flow deficit for a second consecutive quarter. Investors worry about AI competition from ChatGPT and Claude, while Google announced a new AI model called Carbon ahead of the results.