Alphabet, the parent company of Google, lost just over $500bn (£374bn) in market value on Thursday after its latest quarterly update. Its stock hit a six-month low.

Alphabet said its AI summaries in search were affecting ad revenue. Total revenue grew 25% from a year earlier to $127.6bn, and Google Cloud revenue grew 103% to almost $31bn. Profits fell 25% during the quarter. The company also reported negative free cash flow of more than $9bn, almost twice the cash loss it showed three months earlier. The BBC reports that this spending is almost entirely dedicated to Google's AI investments.

By the end of Thursday, Alphabet's total market value had fallen to $3.46 trillion from $3.97 trillion the day before. The stock fell almost 13% that day, its second lowest showing this year.

Phillip Schindler, Google's chief business officer, said on Wednesday that he felt "very good about our trajectory" with an AI-focused version of the search engine.

Tracy Woo, a principal analyst at Forrester, said Alphabet's search results "highlight the challenge of funding massive AI investments while maintaining the strength of established businesses."

Amazon's shares fell 6% in after-hours trading after it reported quarterly sales growth of 11% to $201bn and negative free cash flow of $42bn. Chief executive Andy Jassy said the spending could help two businesses bring in $1 trillion for Amazon in the future, but he did not name them. He repeatedly cited Amazon's own computer chips and its AI developer platform Bedrock. Jassy said: "We can fund this plan, and I think it will forever change the size, the revenue, the free cash flow of Amazon."

Microsoft's shares fell less than 1% on Thursday. Its revenue grew 19% to $92.3bn, and its cloud business grew 30% to $63bn. Chief executive Satya Nadella said automated tasks using Copilot "nearly double since July," and daily users grew by 500% from a year ago. The BBC reports Microsoft also plans to cut thousands of workers.

Woo said Wall Street is looking further ahead to determine which companies will deliver on their AI promises. She said: "Microsoft's results reinforce that enterprise demand for AI remains strong, but they also highlight a much bigger question facing the technology industry, where AI value will ultimately be captured."