Alphabet loses more than $500bn in market value
Investors were alarmed by weaker advertising growth and the rapidly rising costs of artificial intelligence.
Listen to this article
There is no audio version yet. Request one and an AI voice will read the article aloud.
Read by an AI voice.
.jpg){kind=link}
Shares in Alphabet, the parent company of Google and YouTube, fell by more than 12 per cent on Thursday. According to US reports, more than $500bn in market value evaporated in a single trading day after the quarterly results raised questions about the costs and returns of its AI strategy.
The share-price fall followed figures for the third quarter, which ended in September. According to Reuters, revenue came to $127.6bn, just below analysts’ expectations of $128.2bn. Advertising revenue was also below expectations, at $82bn rather than the anticipated $83.4bn.
Investors are particularly concerned about Google’s core business. Growth in search advertising slowed more sharply than expected. Alphabet partly attributed this to the use of AI Mode, an experimental chatbot feature within its search engine. The company also wants to bring advertising in that AI mode to international markets.
At the same time, Google Cloud is growing rapidly. According to Reuters, revenue from the cloud division doubled to $30.71bn in the third quarter. Reuters said the division therefore exceeded expectations, but that growth did not dispel concerns about advertising and the overall investment burden.
According to Reuters, Alphabet also spent much more on data centres, chips and other AI infrastructure. Reuters reported that the company used $5.9bn in cash during the past quarter, and that free cash flow turned negative for the first time in 22 years. Overall, the negative free cash flow amounted to $9.1bn, according to the reports.
Net income attributable to ordinary shareholders fell by 25 per cent to $26.17bn. Adjusted earnings per share came to $2.67, compared with expectations of $3.02. Alphabet also indicated that it wants to increase capital investment further; a figure of $195bn to $205bn has been cited for 2026, with further growth expected in 2027.
The figures raise the question of whether Alphabet can achieve future growth through high AI investment without putting pressure on profitability. The share-price fall does not yet provide a definitive answer.
Other major technology companies also came under pressure on Friday. According to AP, US futures for the S&P 500 fell by 1 per cent and those for the Nasdaq by 2.3 per cent. Amazon and Intel also lost ground after their own quarterly updates, broadening concerns about AI spending and the outlook for technology companies beyond Alphabet alone.
Also show the region and a close-up
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
The financial figures and the share-price reaction are consistent with reports from Reuters and AP. The wording about more than $500bn in lost market value is presented as a rounded market fluctuation, since the figure varies depending on the measurement point.
- confirmed Alphabet shares fell by more than 12 per cent on Thursday. — AP reported a fall of more than 12 per cent and the worst trading day since the company’s listing. source
- confirmed Alphabet lost more than $500bn in market value. — NBC reported more than $500bn; this is presented as a rounded market-capitalisation figure. source
- confirmed Revenue in the third quarter was $127.6bn. — Reuters gives this revenue figure and analysts’ expectation of $128.2bn. source
- confirmed Google Cloud revenue doubled to $30.71bn. — Reuters gives this revenue figure for the quarter ending on 30 September. source
- confirmed Free cash flow turned negative and Alphabet used $5.9bn in the quarter. — Reuters gives both the negative free cash flow and the cash outflow. source
- confirmed Net income for ordinary shareholders fell by 25 per cent to $26.17bn. — Reuters reports this result and adjusted earnings per share of $2.67. source
- confirmed S&P 500 futures fell by 1 per cent on Friday and Nasdaq futures by 2.3 per cent. — AP reported these levels in early trading. source
Editor's note
The share-price fall, quarterly figures and investment concerns were confirmed by AP and Reuters. The exact market value destroyed varies depending on the measurement point; the headline therefore rounds the figure to more than $500bn.Sources
- US futures fall as Amazon, Intel and Alphabet weigh on Wall Street — Associated Press
- Alphabet stock sinks as search woes cause revenue miss, cash burn worsens — Reuters via MarketScreener
More on this in Dutch media
- Het Parool — „alphabet google”
- de Volkskrant — „alphabet google”
- NU.nl — „alphabet google”