Google shares slide 12% as AI spending surges

Google shares slid 12% on Oct. 31 after the company reported slowing search revenue growth alongside heavier capital expenditure on artificial intelligence infrastructure, according to financial disclosures.

Capital spending outpaces search revenue

Total revenue rose 25% compared with the prior-year period, but operating margins compressed as depreciation and data center expenses mounted. The moderation in core advertising revenue highlighted emerging tension between massive computing hardware investments and immediate commercial monetization across traditional search channels.

Equities across the broader technology sector retreated following the announcement, extending declines among semiconductor suppliers and enterprise cloud providers in New York trading. Institutional investors reassessed valuation multiples across mega-cap holdings, noting that elevated infrastructure outlays threaten to constrain corporate free cash flow unless artificial intelligence revenue gains accelerate in coming quarters.

The sharp divergence between solid top-line sales and the falling equity price points to stricter market benchmarks for computing returns. Financial analysts cited rising server depreciation schedules and facility power expenses as primary factors limiting operating leverage across digital advertising platforms.

Market participants now await the company's comprehensive regulatory filing scheduled for Nov. 6, when executives are set to provide granular segment margin disclosures and updated capital expenditure guidance for the fourth quarter.