As skepticism toward AI investment becomes a focus for the market, attention is turning to developments surrounding the quality of negative free cash flow at major companies. This article summarizes Alphabet's share-price performance after its earnings announcement and the differences in financial metrics associated with AI investment.
Alphabet was reported to have recorded its largest-ever decline since listing after announcing its earnings, with its market capitalization falling by approximately ¥80 trillion. By contrast, Microsoft is said to have maintained positive free cash flow of $18.633 billion over the same period, resulting in a significant divergence in share-price performance.
Amazon's trailing 12-month free cash flow deficit has reached $42.357 billion, making its scale particularly notable. Its high-growth businesses, centered on data centers, are considered a factor supporting investor confidence in the company.
Alphabet's core advertising revenue is reportedly slowing, and some observers have warned that the stronger its AI capabilities become, the greater the headwinds for search advertising could be. The cost-effectiveness of AI-related investment has become a focus of market attention.
Following the Democrats' victory in the U.S. midterm elections, some observers believe that certain factors surrounding AI have been clarified. However, concerns over data center regulation remain and are regarded as an issue that could continue to weigh on sentiment.