Google fell 12% on Thursday, wiping out nearly $500 billion in market value in a single day—the worst day in its more than 20 years as a public company. Revenue still grew 25%, but it wasn’t enough to meet Wall Street’s expectations.
The glaring issue was cash flow: free cash flow was negative $9.07 billion in the third quarter, while the market had expected it to be positive. The company didn’t budge on its capital spending guidance, and even doubling cloud revenue couldn’t plug the hole. Search ad revenue also fell short of expectations. Revenue is growing, but the money is going out even faster. At first glance, those numbers look like a typo.
After hours, Amazon’s data center spending also came in above expectations, and its free cash flow plunged, sending shares down by double digits. Intel’s guidance for next quarter was far below analyst expectations, and its shares fell more than 20%. The three companies have little in common, but they all stumbled over the same issue: they’re spending big on AI, with no clear payoff in sight.
The glaring issue was cash flow: free cash flow was negative $9.07 billion in the third quarter, while the market had expected it to be positive. The company didn’t budge on its capital spending guidance, and even doubling cloud revenue couldn’t plug the hole. Search ad revenue also fell short of expectations. Revenue is growing, but the money is going out even faster. At first glance, those numbers look like a typo.
After hours, Amazon’s data center spending also came in above expectations, and its free cash flow plunged, sending shares down by double digits. Intel’s guidance for next quarter was far below analyst expectations, and its shares fell more than 20%. The three companies have little in common, but they all stumbled over the same issue: they’re spending big on AI, with no clear payoff in sight.