Alphabet, the Mountain View company that owns Google, had one of the worst days in stock market history on Thursday. Its shares fell as much as 15.8% in trading, putting the company on course for its worst single-day drop ever, NBC Bay Area reported. The slide erased more than $500 billion in market value.
How big is that?
Business Insider reported that the drop cut Alphabet's market value from about $3.9 trillion to about $3.4 trillion. If the losses held through the close, it would be the second-largest one-day loss of market value ever. Only Nvidia has lost more in a single day, shedding close to $600 billion on Jan. 27, 2025. Even after the drop, NBC reported, Google is still America's fourth-largest company by market value.
What spooked investors
The selloff followed Alphabet's third-quarter earnings report on Wednesday, which showed about $9.1 billion in negative free cash flow and profits that fell short of Wall Street forecasts. Business Insider reported that search revenue of $63 billion came in below analysts' estimates and was virtually flat from the previous quarter, after beating estimates in each of the four prior quarters. JPMorgan analysts wrote Thursday that the "magnitude" of the slowdown in Google's search business was "steeper than expected."
On the investor call, Alphabet chief business officer Philipp Schindler said part of the search weakness came from lower monetization inside Google's own AI Mode, which shows fewer ads. He said the company is now scaling ads within AI Overviews and AI Mode, including in international markets.
The cost of AI
Alphabet reported negative free cash flow of $9.07 billion for the quarter, far worse than the $2.70 billion analysts expected, CNBC reported. The company kept its full-year capital spending guidance at $195 billion to $205 billion, and NBC reported it has committed to more than $1 trillion in multi-year agreements for the infrastructure, energy and leases needed to run AI systems.
CNBC noted that if Alphabet closed more than 9.77% lower, it would be the company's worst reaction to earnings since it went public in 2004. Microsoft, which reported the same day, initially rose but had reversed to fall about 2% by mid-morning Thursday, NBC reported.
Why it matters here
Alphabet is one of the Bay Area's largest employers and the anchor of Mountain View's economy, and its stock is a big part of the pay of many local tech workers. Executives pointed to more than 1 billion users of the Gemini AI app as a bright spot, but Thursday's selling was a sign of wider Wall Street anxiety over how long big AI spending will take to pay off. For the earnings numbers themselves, see our report on Alphabet's third-quarter results.