Alphabet shares drop as much as 15.8% intraday, wiping $550 billion

Shares of Alphabet, Google’s parent company, plunged on Thursday, erasing more than $550 billion in market value in what appears to be the company’s worst single-day drop in history ^[2]. NBC News reported that the stock sank by as much as 15.8%, ranking as the second-worst one-day market value loss ever, only behind Nvidia’s $589 billion drop in 2025. Sky News noted that this move puts Alphabet on course for one of its sharpest declines ever, signaling deep anxiety across Wall Street about the timeline for returns on massive artificial intelligence investments ^[1].

The sell-off followed Alphabet’s latest quarterly financial report, which revealed that revenues fell short of Wall Street expectations and advertising sales were lackluster ^[2]. According to NBC News, JPMorgan Chase analysts described the slowdown in Google’s search business as "steeper than expected". A senior Alphabet executive told investors that ad revenues from search were underperforming partly because of Google’s own "AI Mode" search feature, which is resulting in fewer ads being served. Senior Vice President Philipp Schindler stated that "ad experiments" in the feature have shown promising results as the company works to address the issue.

Despite the stock plunge, Alphabet remains America’s fourth-largest company by market value, with shares worth more than $3.4 trillion ^[2]. However, the cost of the AI build-out is mounting. The company revealed it has pledged over $1 trillion in long-term contracts to cover the infrastructure, energy, and leases needed for its AI operations. This follows an announcement in July that Alphabet planned to spend more than $200 billion this year, double its 2025 spending, and a June capital raise of almost $80 billion for AI expansion.

Executives attempted to soften the blow by highlighting more than 1 billion users of its Gemini AI app, but the market focused on the costs ^[2]. CBS News reported that the stock fell nearly 13% by the close, marking the worst day since the company went public ^[3]. The negative sentiment spread beyond Alphabet, dragging the Nasdaq Composite down 1.6% and the S&P 500 down 0.6%. Chip companies supplying AI data centers also saw declines, with the Philadelphia semiconductor index dropping 1.6%.

The selling pressure even reached the industrial sector. Caterpillar, a key supplier of construction equipment for data centers, saw its shares plunge 9% early Thursday ^[2]. Although Caterpillar’s revenues beat expectations, they missed by less than traders hoped, leading to dramatic sell-offs for firms that only narrowly top earnings targets. As investors demand higher returns from the costly AI build-out, even strong companies are facing punishment if they do not exceed forecasts. Alphabet’s struggles stand in contrast to peer Microsoft, whose shares initially rose after reporting better results before reversing course to fall about 2% by midmorning.