Google parent Alphabet suffers $500 billion market-value loss
Alphabet lost approximately $499.8 billion in market value after its shares fell 12.64% following quarterly results that missed Wall Street expectations…
Google parent Alphabet suffers a market-value loss of approximately $499.8 billion after its Class A shares fell 12.64% on Thursday, following quarterly earnings that missed Wall Street expectations. The steep decline put the company’s spending on artificial intelligence infrastructure and the pace of its search business under close investor scrutiny.
Shares closed at $283.82. Alphabet’s loss was the second-largest single-day market-value decline in stock market history, while the company’s revenue still grew 25% from a year earlier, to $127.6 billion.
The figures left investors weighing a familiar tension: demand for AI services is growing, but building the computing capacity to support them requires heavy spending. Alphabet’s results also showed slower growth in Google Search, a core advertising business.
AI spending and search growth in focus
Google Search revenue increased 12% year over year, down from 17% growth in the previous quarter. The slowdown added to questions about whether Alphabet can maintain search growth as AI-powered tools reshape the industry.
The company spent approximately $51.4 billion on capital expenditures during the quarter, much of it for data centers and computing infrastructure to support its expanding AI operations. Alphabet expects capital expenditures of between $195 billion and $205 billion this year, with spending projected to rise significantly in 2027.
That scale of investment carries a direct business risk: spending on infrastructure can pressure profits before the company can show that its AI services will generate durable returns. Investors are looking for evidence that the expanding capacity will translate into sustainable earnings, not just higher demand.
Alphabet’s cloud business offered a counterpoint. Google Cloud revenue more than doubled to $30.7 billion, up 103% from a year earlier and above analysts’ expectations of $29.2 billion.
Demand is strong. Costs are, too.
Chief Financial Officer Anat Ashkenazi warned that Google Cloud could face near-term pressure on profit margins as the company uses outside computing capacity to meet demand. That makes cloud growth a mixed signal: it points to customer appetite for AI services, while highlighting the expense of serving them.
Investors reassess the cost of AI
The earnings report, released Wednesday, intensified concerns about the cost of expanding Alphabet’s AI operations. The company’s results reflect a broader challenge for major technology firms investing heavily in AI infrastructure while investors seek signs those investments can produce lasting profits.
Thursday’s decline exceeded Alphabet’s previous record single-day market-value loss of approximately $275 billion in July. Nvidia holds the record for the largest such loss, shedding approximately $589 billion in January 2025.
For Alphabet, the next test is whether growth in cloud and AI services can keep pace with the cost of the infrastructure behind them, while its search advertising business sustains revenue growth.
