Two of the world’s biggest technology companies have struggled to meet Wall Street’s sky-high expectations, wiping out around £130bn of value.
Shares in Google owner Alphabet fell 6% as investors were disappointed by poor advertising results last quarter.
This reduced its value by around £100bn. Microsoft fell by around 1%, reducing its massive market capitalization by around £30bn.
The two have come together in recent months amid growing excitement about artificial intelligence (AI) and its ability to transform Silicon Valley and the rest of the world.
Microsoft has been considered to be at the forefront of AI due to its early investment in ChatGPT maker Open AI.

Spooky: Google owner Alphabet saw its stock drop more than 6% as investors disappointed with last quarter’s weak ad performance
Alphabet has also been investing in AI to build into products like Google Search.
But stocks took a turn this week after both companies reported seemingly positive quarterly profits.
Alphabet reports its fastest-growing quarter since early 2022, with sales of £67.7bn for the three months to end December, up 13% year-on-year, driven by its cloud computing division did.
However, advertising remains a challenge due to fierce competition from platforms such as Facebook, TikTok, and Amazon, as well as a tough economic backdrop.
“Alphabet’s disappointing numbers suggest that companies around the world are uncertain about the pace at which central banks will cut interest rates,” said Thomas Monteiro, an analyst at Investing.com.
“Expectations were too high to meet them,” said Steve Clayton, head of equity funds at Hargreaves Lansdown. “This is always going to be one of those occasions where hopes, expectations and reality collide.”
Microsoft also released quarterly statistics on Tuesday.
The company, which recently became the world’s most valuable company with a market capitalization of over $3 trillion, posted record sales of £49 billion in the three months to December, driven by rising demand for AI and cloud technology.
Investor-focused Azure cloud computing sales rose 30% year over year, beating Wall Street expectations.
Quarterly profits rose 33% to £17.2bn, but the stock price also took a hit.
“High valuations mean investors will be taken in by even the slightest hint of disappointment,” said Russ Mould, investment director at AJ Bell.
Facebook owner Meta, Amazon and Apple are expected to release their own quarterly statistics today.