Alphabet registers worst day ever as $500 bln in market value is wiped out

Shares of Google parent Alphabet fell more than 12% on Thursday, their biggest one-day decline since the company went public, according to Dow Jones Market Data. The slide wiped out around $500 billion in market value, the Wall Street Journal reports.

The selloff in Alphabet deepened the loss for the Nasdaq Composite, which closed down 1.4%. The broad-market S&P 500 and the blue-chip Dow Jones Industrial Average each fell 0.3% on the day.

The selloff followed Alphabet’s third-quarter earnings report, released after the close on Wednesday. Its Google Services unit, which includes search advertising, YouTube, and subscriptions, generated $96.3 billion in revenue, below Wall Street’s forecast of $98.5 billion. That signals a slowdown in Google’s biggest revenue engine as users’ online habits change and the company reshapes search around AI, the WSJ notes. Alphabet also reported higher-than-expected operating expenses and negative free cash flow, underscoring the enormous costs of securing data center capacity and developing new AI models.

Search revenue grew 12% year over year in the third quarter, versus 17% in the second quarter and 19% in the first. The slowdown exposes Google’s dilemma: how to rebuild its lucrative search business around AI without undermining it. It also spooked investors, who had so far tolerated Big Tech’s massive spending partly because the core businesses of Google, Microsoft, and Amazon consistently generated profits.

“One of the companies most aggressively investing in AI to protect its core businesses showed vulnerability to AI,” Mike O’Rourke, chief market strategist at JonesTrading, said of Google’s earnings. “That’s why people are disappointed.”