Google shares fell 10 percent on Tuesday after the company reported a $51 billion outlay on AI that deepened its cash burn, with executives admitting its "AI mode" had hurt traditional search as sales and profits undershot expectations .
Microsoft, meanwhile, disclosed in a regulatory filing that it generated $10 billion in revenue from OpenAI in the quarter ended September 30, nearly 11 percent of its total quarterly revenue of $92.3 billion . The company also reported $7.2 billion in outstanding receivables from OpenAI at the end of September, up from $6 billion at the end of June.
Google’s AI investments are driving search query growth, with CEO Sundar Pichai stating that the year-over-year query growth rate is the highest it has been in five years . Alphabet’s consolidated revenues for the quarter were $127.6 billion, up 25 percent year-over-year, with Google Cloud revenue rising 103 percent to $30.7 billion.
The financial strain comes as Google races to deploy new models, unveiling Gemini 4 Carbon just two weeks after releasing Argon. The company described Carbon as a “significant leap” in cybersecurity, coding, and agentic tasks, outperforming rivals on some benchmarks .
Anthropic, another major AI developer, is struggling to secure the computing power it needs, with direct chip purchases threatening to consume much of its cash flow . The pressure on supply chains and finances underscores the escalating costs of the AI arms race, even as companies like Microsoft and Google push forward with new models and integrations.
