Alphabet's stock fell 12.64% in a single day, wiping out about $500 billion in market value

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On October 29 local time, the day after releasing its latest earnings report, Google parent company Alphabet (Nasdaq: GOOGL) saw its stock plunge nearly 12.64%, the largest single-day drop since its 2004 listing, with about $500 billion in market value wiped out in a single day, leaving it at $3.46 trillion.

The scale of Google's market value shrinkage ranks second in Wall Street history, trailing only Nvidia's record single-day loss of $593 billion in January 2025.

The impact of Google's stock plunge also spread across the entire U.S. stock market, with the tech-heavy Nasdaq Composite Index falling 1.4% to 26,184.72 points. Google's earnings, combined with the gloomy results reports released by Amazon and Intel on the afternoon of the 29th, pushed traders to seek safe-haven assets, and the yield on the U.S. 10-year Treasury note fell accordingly.

After U.S. market hours the previous day, Google released an earnings report in which both revenue and net profit missed expectations. The company's third-quarter free cash flow was negative $9.07 billion, capital expenditure reached $51.36 billion, it maintained its full-year capital spending forecast of $195 billion to $205 billion, and it expects full-year capital expenditure in 2027 to exceed $300 billion.

Google's AI bet is becoming increasingly expensive. According to company disclosures, its total future commitments for data center procurement, leases, equipment, energy and other obligations have exceeded $1 trillion.

To support this round of massive spending, Google has already taken on tens of billions of dollars in debt. In June this year, the company also announced plans to raise about $85 billion through additional share issuance other than an initial public offering.

Compared with Google, Microsoft, which released its earnings on the same day, successfully met market expectations, with its stock (Nasdaq: MSFT) closing down 0.16% on the 29th. Microsoft's capital expenditure and finance lease spending in the latest fiscal quarter reached $45.2 billion, up 30% year on year, but below the market expectation of $50.67 billion. Although the company's free cash flow fell 27% year on year to $18.63 billion, it remained positive.

Ben Barringer, global head of technology research at Quilter Cheviot, said: "Microsoft is expanding its infrastructure in a relatively prudent way, so it brings fewer surprises. By contrast, Google released a rather messy earnings report, and its handling of the earnings call was less than satisfactory, causing its stock price to be hit in after-hours trading."

Dec Mullarkey, a managing director at asset management firm SLC Management, said the market is carefully weighing the trade-off between capital expenditure and free cash flow: "Microsoft has done an excellent job controlling cash flow while achieving growth. Google has underperformed, and cash flow is expected to become a drag on its growth next year."

On October 29, e-commerce giant Amazon released its latest earnings report. Its third-quarter revenue rose 12% year on year to $201.944 billion, below the market expectation of $202.3 billion, and free cash flow was negative for a second consecutive quarter. After the earnings release, the company's stock plunged more than 7% in after-hours trading.

In addition, chip giant Intel's third-quarter 2026 earnings report showed that its revenue for the quarter rose 21% year on year. However, weak PC market demand, limited supply of server chips, and production impacts from an accident at its Israeli plant cast a shadow over the company's fourth-quarter performance outlook. After the earnings release, Intel's stock plunged 23% in after-hours trading.

With the rise of AI chatbots such as OpenAI's ChatGPT and Anthropic's Claude, Google's search business is facing increasing pressure, while Google's own AI chatbot Gemini has failed to keep pace with competitors in terms of development speed. The search advertising business is Google's largest source of revenue.

In the third quarter, Google's search advertising revenue rose 12% year on year to $63.35 billion, but still fell short of analyst expectations, further increasing pressure on the company's stock price.

David Wagner, head of equity business at Aptus Capital Advisors, said: "The market's concerns are concentrated on the search business. In a market worried that AI chatbots will cannibalize Google's core business, investors need to see accelerated growth in the search business, not a slowdown."

Google Chief Business Officer Philipp Schindler said that part of the impact on the search business came from the lower monetization level of "AI Mode." He also said that Alphabet is currently expanding advertising placements in its "AI Overviews" and "AI Mode" products, including promoting related advertising businesses in international markets.

However, in contrast to the lackluster performance of the search business, Google's cloud business sales doubled to $30.7 billion. This was mainly driven by a surge in customer demand for its AI services and the company's sale of computing power to competitors such as Anthropic.

Barringer said: "The problem Google faces is the innovator's dilemma: it does not know whether it should protect its core business or actively join this disruptive change. As a result, Google has lost its leading edge in Gemini and also lags behind peers in the field of agentic AI."

Scott Devitt, an analyst at Rosenblatt Securities, believes that Google's dominant position in the search market may ultimately become an advantage over its competitors.

Devitt pointed out that the pressure facing Google is not a fundamental change: "This problem will eventually be resolved. And when it is resolved, Alphabet has 4 billion search users, all of whom could become AI users, which puts Google in an enviable position."

(Source: The Paper) Body middle Embedded ad