{"text":[[{"start":9.44,"text":"Google shares fell sharply it after boosted its AI spending to more than $50bn in the third quarter, leading to a record cash burn that spooked investors alongside weakness in its core search advertising business."}],[{"start":23.18,"text":"The search giant’s free cash flow fell deeper into negative territory in the three months to the end of September, at minus $9.1bn, compared to minus $5.9bn in the prior quarter, Google’s parent company Alphabet reported on Wednesday."}],[{"start":39.64,"text":"Google’s cash burn was much larger than Wall Street had anticipated and marked only the second quarter of negative cash flow since it went public in 2004."}],[{"start":49.44,"text":"Its shares fell more than 10 per cent in after-hours trading as Google acknowledged its chatbot-style “AI mode” was hurting the traditional search business."}],[{"start":58.6,"text":"The share price drop, if sustained, would wipe more than $400bn from the group’s market value, the largest single-day loss in the company’s history."}],[{"start":68.58,"text":"The shift to burning cash has been caused by historic capital expenditure on AI as Google makes an all-in bet on the transformational potential of the nascent technology."}],[{"start":78.36,"text":"Capex grew to $51.3bn in the quarter, up from $44.9bn in the second quarter. Chief financial officer Anat Ashkenazi reiterated that capex will reach as much as $205bn this year, implying that spending in the fourth quarter could be as high as $73.1bn."}],[{"start":98.12,"text":"Google disclosed it has made future commitments for data centre purchases, leases, equipment, energy and other obligations in excess of $1tn."}],[{"start":107.4,"text":"To back the spending spree, Alphabet has taken on tens of billions in debt and in June announced plans to raise about $85bn in its first share sale in more than two decades — a sharp reversal after years of buying back its own shares."}],[{"start":121.16,"text":"Microsoft received a warmer reception on Wednesday, rising 4 per cent after strong growth in its Azure cloud unit helped revenue and profit beat estimates. While capex rose to $45.2bn, the company still reported free cash flow of $18.6bn."}],[{"start":138.52,"text":"“Markets are carefully calibrating the trade-off between capex and free cash flow,” said Dec Mullarkey, managing director at asset management firm SLC Management. “Microsoft is a standout on cash discipline, while delivering on growth. Google fell short and cash flow is expected to be a drag through next year.”"}],[{"start":158.8,"text":"Analysts also flagged weakness in Google’s core search advertising business as a source of concern. Revenue in its largest division increased 12 per cent year-on-year to $63.4bn, missing estimates for $64.9bn and slowing from a near 20 per cent annual growth rate earlier in the year."}],[{"start":178.44,"text":"Philipp Schindler, chief business officer at Google, admitted “AI mode” queries — which provide conversational text answers rather than a list of links — are eating into traditional search and lead to “lower monetisation” via ads."}],[{"start":192.28,"text":"“Search is where the concern sits,” said David Wagner, head of equity at Aptus Capital Advisors. “In a market worried about AI chatbots cannibalising its key franchise, investors need to see it accelerating, not decelerating.”"}],[{"start":207.02,"text":"Group revenue increased 25 per cent to $127.6bn in the quarter, also falling slightly short of the average analyst forecast compiled by FactSet."}],[{"start":217.98,"text":"Net income fell 25 per cent to $26.2bn compared with the same period a year earlier, far from analysts’ expectations for $37.3bn."}],[{"start":228.96,"text":"That figure has been affected by changes in the value of Google’s investments, which include a stake in SpaceX. Elon Musk’s rocket maker fell about 4 per cent during the period, contributing to Google’s $8.7bn net loss on equity investments."}],[{"start":244.24,"text":"Operating income, which does not include investment losses, rose 30 per cent to $40.6bn but missed Wall Street’s expectations for $43.2bn."}],[{"start":254.84,"text":"Ashkenazi noted that a $5.2bn cash payment to settle a 2018 European regulatory fine contributed to the more deeply negative cash flows. Google recently lost an appeal against a verdict that it engaged in anti-competitive behaviour via its Android operating system."}],[{"start":272,"text":"Offsetting the gloom in search, Google’s cloud business doubled its sales to $30.7bn, benefiting from surging customer demand for its own AI services as well as selling computing capacity to rivals such as start-up Anthropic."}],[{"start":287.52,"text":"Google has touted its “full-stack” AI strategy as a major strategic advantage, developing its own chips, data centres and frontier models which are then delivered to billions of loyal consumers via its established apps and services."}],[{"start":301.88,"text":"Chief executive Sundar Pichai has been criticised for being slow to deploy AI and allowing a company of Google’s scale to fall behind start-ups such as Anthropic and OpenAI in the lucrative enterprise sector."}],[{"start":314.92,"text":"Pichai said two new versions of its most advanced Gemini models — Argon and Carbon — have closed the gap in coding, finance and cyber security and should help Alphabet win back market share."}],[{"start":333.28,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793232004_5960.mp3"}