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Google slammed with $200,000,000,000 stock hit following massive surge in AI-related spending

Home> News> AI

Published 10:54 10 Feb 2025 GMT

Google slammed with $200,000,000,000 stock hit following massive surge in AI-related spending

Revenue decreases in line with AI budget boosts has seen Google receive criticism

Harry Boulton

Harry Boulton

Featured Image Credit: Roberto Machado Noa / Contributor / Getty
AI
Google
Money

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Google have seen a dramatic loss on the stock market following announcements of increased AI spending, dropping around $200,000,000,000 in conjunction with revenue drops.

Alphabet, the parent company of Google, has remained one of the most valuable companies worldwide alongside similar tech giants like Microsoft, Nvidia, and Apple.

Despite an increase of 30% to their cloud-computing division revenue and a quarterly overall revenue jump of 12% at the end of 2024, Google's financial performance has been disappointing for investors and under what expert analysists initially predicted.

Google's AI pushes have seen a significant drop in the stock market (Greg Baker/AFP via Getty Images)
Google's AI pushes have seen a significant drop in the stock market (Greg Baker/AFP via Getty Images)

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While this is definitely enough to see some downward movement on the stock market, the company has suffered losses of around $200,000,000,000 in just a matter of days due to increased AI-related spending plans.

Alphabet, like many of the biggest technology companies, saw value drops after the release of Chinese ChatGPT-rival DeepSeek, as it burst the proverbial AI bubble by directly contrasting the high-spending approach of many western companies like Google.

Despite this, Alphabet CEO Sundar Pichai announced that capital expenditures in 2025 would increase from $52,500,000,000 to $75,000,000,000 in 2025, with AI being the primary focus, as reported by the New York Post.

He outlined that while DeepSeek had done "very, very good work," Google's own AI outputs were "some of the most efficient models out there."

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Pichai also added that "the cost of actually using [AI] is going to keep coming down, which will make more use cases feasible, and that's the opportunity space."

This resulted in a market cap drop from $2.5 trillion at the start of February to roughly $2.35 trillion at the end of the month's first week, with single drock prices dropping as low as $190.99.

D.A. Davidson analyst Gil Luria indicated that "if this is the new trend for Alphabet, then investors should be worried," yet the company appears to be unperturbed by market losses and investor anxiety, remaining committed to its long-term AI goals.

Google CEO Sundar Pichai remains comitted to the efficiency of the company's AI models (Michael M. Santiago/Getty Images)
Google CEO Sundar Pichai remains comitted to the efficiency of the company's AI models (Michael M. Santiago/Getty Images)

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Wedbush analyst Dan Ives contrasted many fears, pointing out: "While the Cloud segment delivered revenue growth of 30%+ for a second consecutive quarter, results were slightly below investor expectations. That said, management commentary was positive and indicated that demand outpaced available capacity in the quarter.

"The more aggressive pace of investment should alleviate capacity constraints as AI demand continues to scale."

Whether Alphabet's continued financial push in the AI market pays off is still yet to be seen, but it certainly offers a different take to the panic that DeepSeek's release brought about, and could play a key role in deciding who 'wins' the global AI race.

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