Google parent Alphabet’s shares plunge over 12%, wiping off $500 billion amid AI worries

Shares of Google's parent company, Alphabet, experienced their most significant single-day decline in history on Thursday, plummeting over 12% and erasing roughly $500 billion from the company's market value. This sharp drop came amid disappointing quarterly sales and increased AI spending, raising concerns about the future of Google's search advertising business.

The decline marked Alphabet's second-largest loss in a single day, surpassed only by Nvidia's nearly $600 billion drop in early 2025. It also outpaced any daily falls Alphabet experienced during the COVID-19 pandemic or the 2008 financial crisis, according to CNN.

Alphabet's quarterly sales on Wednesday fell short of analysts' expectations, exacerbating investor unease as the company continued to increase its AI expenditure. The results reignited concerns that the growing use of AI chatbots, including Google's own products and those of its competitors, could undermine traditional search and its advertising revenue. This led to a heavier investment in AI infrastructure, which is putting pressure on cash flow and leaving less available for shareholder payouts.

Moreover, Alphabet reported negative free cash flow for a second consecutive quarter, a first since going public as Google in 2004. The company allocated $51.4 billion to capital expenditure in the third quarter alone, compared to $91.4 billion throughout all of 2025. This spending on AI infrastructure, including data centers, has limited cash available for shareholder dividends and buybacks.

In contrast, Microsoft reported a more positive third-quarter free cash flow of $18.6 billion, with its shares remaining unchanged at the end of the trading day.