Alphabet lost $500 billion of market value in a single Thursday session. Its shares fell 12.6%, the worst one-day drop in the stock’s history, and the company that owns Google is now valued at $3.47 trillion, fourth-largest in America.
Only one bigger one-day wipeout exists in U.S. market records: Nvidia’s $589 billion drop in late January 2025.
A weak quarter, and AI Mode
The trigger was Wednesday’s quarterly report, which showed revenue below what Wall Street had expected. JPMorgan Chase analysts wrote Thursday morning that the “magnitude” of the slowdown in Google’s search business was “steeper than expected.”
On the investor call, a senior Alphabet executive pointed to Google’s own “AI Mode” search feature as part of the reason. It was producing fewer ads. Senior Vice President Philipp Schindler said the company is working on that and that “ad experiments” in the feature have “shown promising results.”
Executives also cited more than 1 billion users of the Gemini AI app. It did not settle investors.
The price of the AI build-out
Alphabet disclosed multiyear spending agreements worth more than $1 trillion, covering the infrastructure, energy and leases that AI systems need. In its July earnings report the company said it planned to spend more than $200 billion this year, twice its 2025 outlay. In June it raised almost $80 billion in capital for the same purpose.
Microsoft, reporting in the same stretch, did better. Its shares first rose in after-hours trading on Wednesday, then gave the gain back and finished Thursday roughly flat.
Damage beyond Alphabet
The Nasdaq Composite closed down 1.38%. The S&P 500 slipped about 0.3%, and the Dow Jones Industrial Average lost slightly more than 130 points. The Philadelphia semiconductor index, which tracks chip companies supplying AI data centers, dropped 1.4%.
The selling reached outside technology. Caterpillar, which makes machines used to build data centers, fell 9.2%. Its latest earnings report had beaten Wall Street’s expectations, though by less than many traders wanted. Only Alphabet did worse among Dow components that day.
Late Thursday afternoon Amazon looked set for a similar hit. After the bell, it reported third-quarter revenue short of expectations, and its shares quickly slid 10% in after-hours trading.
NBC News described the day as the latest sign of anxiety on Wall Street over how long it will take big AI companies to earn steady returns on investments worth hundreds of billions of dollars. Firms that only narrowly top earnings targets, as Caterpillar did, have been punished in sharp sell-offs.
