$190 billion disappeared after disappointing reports from Google and Microsoft

In a seismic shock to the tech landscape, quarterly reports from industry giants Google and Microsoft have triggered a staggering $190 billion collapse in the market capitalization of artificial intelligence (AI) companies. Investors, anticipating robust performances, were left disheartened as shares of AI-related firms plummeted in the wake of lackluster financial revelations.

Google’s Alphabet Takes a Hit Amid Ad Revenue Slump

Alphabet, the parent company of Google, experienced a sharp 5.6% decline in shares, catalyzed by the shortfall in Google’s December ad revenue compared to market expectations. While the quarterly figures still reflected a substantial ad revenue of $9.2 billion, marking a 15% year-over-year increase, investor dissatisfaction was evident. Google acknowledged an upswing in spending on data centers to fortify its AI endeavors, signaling heightened competition with Microsoft. Despite these challenges, Google reported a commendable overall revenue of $86 billion for the last quarter.

Microsoft’s Azure Surpasses Google Cloud, Yet Shares Slip

Microsoft emerged as a winner in the AI race, with its Azure cloud platform outpacing Google Cloud in growth. The company surpassed analysts’ revenue forecasts, reaching a robust $62 billion for the quarter, attributed to the success of new AI features attracting customers to its cloud and Windows services. However, a 0.7% dip in Microsoft’s shares revealed a nuanced response from investors, reflecting the dual sentiment of success in AI-driven ventures and concerns about overall performance.

Microsoft’s AI Triumph: $3 Trillion Market Cap Milestone

Microsoft’s strategic focus on artificial intelligence propelled the company into uncharted territory, surging beyond the $3 trillion market capitalization mark this month and dethroning Apple. This significant milestone underscores the growing importance of AI technologies in shaping market dynamics and corporate valuations.

Chip Makers and AI Front-Runners Bear the Brunt

The repercussions extended beyond the tech giants to impact chip makers and industry leaders. Shares of Advanced Micro, a prominent chip manufacturer, witnessed a sharp 6% decline after its first-quarter revenue forecast failed to meet estimates. Nvidia, which experienced a remarkable 27% surge in January, retraced some of those gains in extended trading, registering a more than 2% fall.

Super Micro Computer Stumbles Amidst AI Market Turmoil

Super Micro Computer, a server component maker benefiting from heightened AI demand, also faced a setback with a more than 3% decline in shares. The broader AI market now grapples with the consequences of the underwhelming reports from Google and Microsoft, prompting industry players to reassess strategies and investors to navigate the evolving landscape.

As the tech sector recalibrates, the $190 billion market cap shockwave serves as a stark reminder of the inherent volatility in the rapidly advancing realm of artificial intelligence. For more details, refer to the original Reuters article here.*