Google parent Alphabet suffers nearly $500B Wall Street wipeout amid AI spending fears

Alphabet, the parent company of Google, experienced a staggering loss of nearly $500 billion in market value on Thursday, as its stock plummeted almost 13% following disappointing quarterly earnings results. This decline marks the second-largest single-day loss in market capitalization in the history of the stock market.

Alphabet's Class A shares closed at $283.82, reflecting a decrease of 12.64% and resulting in a market capitalization drop of around $499.8 billion, as reported by The Wall Street Journal.

The significant sell-off was triggered by Alphabet's third-quarter earnings report released on Wednesday, which revealed a revenue figure of $127.6 billion. While this represented a 25% increase from the same period last year, it fell short of Wall Street's expectations, raising concerns among investors.

Investors are particularly worried about Alphabet's substantial expenditures on artificial intelligence (AI) and a slowing growth rate in its primary revenue source: search advertising. Revenue from Google Search increased by 12% compared to the prior year, a notable decline from the 17% growth reported in the previous quarter. This slowdown has intensified worries about the company's ability to maintain its growth trajectory as AI-driven search technologies evolve.

During the quarter, Alphabet allocated around $51.4 billion toward capital expenditures, with a significant portion directed at data centers and the computing infrastructure necessary for its expanding AI operations. The company has projected that its capital expenditures for the year will range between $195 billion and $205 billion, with a significant increase in spending anticipated by 2027, as previously reported by FOX Business.

Despite these concerns, Alphabet's cloud computing segment showed remarkable growth. Google Cloud revenue surged to $30.7 billion, more than doubling with a 103% increase from the same quarter last year, surpassing analysts' expectations of $29.2 billion. This growth is indicative of the strong demand for AI services; however, it also raises questions about the potential impact on profitability due to the costs associated with meeting this demand.

Anat Ashkenazi, Alphabet's Chief Financial Officer, cautioned that Google Cloud may encounter near-term pressure on profit margins as the company relies on external computing resources to satisfy demand, as previously reported by FOX Business.

The situation highlights the mounting challenges faced by major technology firms as they invest billions into AI infrastructure while investors seek reassurance that these expenditures will yield sustainable profits.

The decline in Alphabet's market value on Thursday eclipsed its previous record single-day loss of about $275 billion, which occurred in July, according to Forbes. For comparison, Nvidia currently holds the record for the largest single-day market capitalization loss, having lost approximately $589 billion in January 2025.