Google loses $400 billion overnight! It’s all because of this “disastrous” earnings report
This report stripped the tech giant bare: user numbers alone aren’t enough. The market is no longer buying into AI that can’t make money and only burns through cash.
On October 28, Google was doing just fine during the day (closing up 1.34%). But as soon as its earnings report came out after the closing bell, the stock plunged more than 11%, wiping out $400 billion in market value overnight and erasing nearly six months of gains. What happened? Let’s break down these “three knockout blows”:
🔥 Blow No. 1: The money-printing machine is “stuttering” (cracks appear in Search)
Google’s most profitable search ads fell short this time. The most alarming part was the disconnect in the data: search volume hit a five-year high, but revenue didn’t keep up. Executives themselves admitted that AI search has a very low monetization rate. The market’s worst fear is coming true: AI is eating into Search’s profits.
💸 Blow No. 2: AI has become a “money shredder” (cash flow under pressure)
Google reported a disastrous $9.07 billion in negative free cash flow (compared with expectations of just $2.7 billion in negative cash flow). What does that mean? Every dollar it earns is going into the bottomless pit of AI infrastructure. Its full-year capital expenditure guidance has jumped to nearly $200 billion, and it plans to keep spending heavily next year and the year after.
🧊 Blow No. 3: Its peers make it look even worse
Without comparison, there’s no pain. Microsoft reported earnings the same day. It’s also investing in AI, but Azure cloud revenue surged 48%, and the stock jumped after hours. Meanwhile, Google’s AI spending has all turned into negative cash flow. Since the start of the year, Apple is up 28% and Nvidia 13%, while Google is up just 2.5%—seriously lagging behind its fellow tech giants.
☕ But there is a small “consolation prize”:
Google Cloud is still going strong, with revenue more than doubling (+103%). And after the sell-off, its price-to-earnings ratio is just 16, much cheaper than Microsoft’s (29). Pichai’s defense: “When we shifted to mobile, we focused on the user experience first, too. The money would come later.”
#谷歌财报能否守住基本盘 $GOOGLB $GOOGL
This report stripped the tech giant bare: user numbers alone aren’t enough. The market is no longer buying into AI that can’t make money and only burns through cash.
On October 28, Google was doing just fine during the day (closing up 1.34%). But as soon as its earnings report came out after the closing bell, the stock plunged more than 11%, wiping out $400 billion in market value overnight and erasing nearly six months of gains. What happened? Let’s break down these “three knockout blows”:
🔥 Blow No. 1: The money-printing machine is “stuttering” (cracks appear in Search)
Google’s most profitable search ads fell short this time. The most alarming part was the disconnect in the data: search volume hit a five-year high, but revenue didn’t keep up. Executives themselves admitted that AI search has a very low monetization rate. The market’s worst fear is coming true: AI is eating into Search’s profits.
💸 Blow No. 2: AI has become a “money shredder” (cash flow under pressure)
Google reported a disastrous $9.07 billion in negative free cash flow (compared with expectations of just $2.7 billion in negative cash flow). What does that mean? Every dollar it earns is going into the bottomless pit of AI infrastructure. Its full-year capital expenditure guidance has jumped to nearly $200 billion, and it plans to keep spending heavily next year and the year after.
🧊 Blow No. 3: Its peers make it look even worse
Without comparison, there’s no pain. Microsoft reported earnings the same day. It’s also investing in AI, but Azure cloud revenue surged 48%, and the stock jumped after hours. Meanwhile, Google’s AI spending has all turned into negative cash flow. Since the start of the year, Apple is up 28% and Nvidia 13%, while Google is up just 2.5%—seriously lagging behind its fellow tech giants.
☕ But there is a small “consolation prize”:
Google Cloud is still going strong, with revenue more than doubling (+103%). And after the sell-off, its price-to-earnings ratio is just 16, much cheaper than Microsoft’s (29). Pichai’s defense: “When we shifted to mobile, we focused on the user experience first, too. The money would come later.”
#谷歌财报能否守住基本盘 $GOOGLB $GOOGL
