Google shares have plunged after a $50bn (£38bn) AI splurge raised fears of overspending by the tech giant.
Alphabet, Google’s parent company, saw its shares fall as much as 9pc in after-hours trading after quarterly sales and profits missed Wall Street estimates.
Massive spending by the cloud giants such as Meta, Google, Microsoft and Amazon has raised fears of an AI bubble, with markets worried the outlays will fail to translate into profits.
Google’s outlays on AI did little to allay those concerns, with the tech giant spending $51.3bn between July and September, up from $44.9bn in the prior quarter.
Google also burned through cash to help keep pace with the AI boom, reporting negative free cash flow of $9.1bn. This is the second time, the first being the previous quarter, that the company has reported negative free cash flow since it listed on Wall Street more than 20 years ago.
Numbers fail to meet forecasts
Earnings fell to $2.12 a share, well below expectations of touching $3, dragged down by an $8.7bn loss on its equity investment portfolio, which includes a large stake in SpaceX.
Revenue rose 25pc to $127.6bn, slightly below the roughly $128bn analysts had forecast.
Search revenues were also weaker than expected while sales from its advertising business disappointed.
By contrast, Microsoft shares jumped as much as 6.4pc in after-hours trading on Wednesday following stronger-than-expected cloud performance, though the gains were later pared to 2pc.
The software giant reported a 19pc rise in quarterly revenue to $92.3bn, beating forecasts by roughly $2bn. There was a 48pc surge in sales at its Azure cloud computing division. Google Cloud revenue rose 103pc to $30.7bn
Anthropic float opening to UK retail investors
The results on Wall Street came after it emerged that British investors may soon be able to buy shares in Anthropic ahead of its blockbuster IPO.
Anthropic filed for a New York listing on Monday that could become the world’s largest-ever IPO, with a target company valuation expected at around $1.5tn to $2tn.
In its filing, Anthropic said it plans to open access to retail investors across the UK and parts of continental Europe.
The developer is in talks with market platform RetailBook to host the shares, Bloomberg reported.
Anthropic is expected to follow Elon Musk’s SpaceX by using the UK’s “public offer platform” (POP) framework, which allows issuers to bypass the standard UK prospectus requirement.
RetailBook, an authorised POP operator, would coordinate the domestic share offering as other retail brokers route client orders into the deal.
The POP route was originally created to help smaller domestic firms raise capital, but overseas issuers have increasingly adopted it.
In June, SpaceX sold $364m of stock to UK retail buyers via POP, followed in September by US sandwich chain Jersey Mike’s Subs Inc.
Anthropic plans to list on the Nasdaq under the ticker symbol ANT, in an offering that could exceed the size of SpaceX’s debut.
Anthropic and RetailBook were contacted for comment.