Google’s market value has hit a record $500 billion in losses as AI encroaches on revenue. Alphabet Inc.’s stock plunged more than 13% at one point, wiping out over $500 billion in market value—a single-day decline that set a company record. Earlier, the company reported disappointing revenue from its search and advertising businesses, intensifying investor concerns about AI threatening its core operations. The Google parent reported third-quarter revenue of $111.2 billion, excluding partner share revenues, falling short of analysts’ estimates. Advertising revenue from search and other channels also missed expectations, with growth slowing to its slowest pace in five quarters. This business accounts for roughly half of the company’s total revenue and serves as a critical funding source for massive AI investments. In a research note, JPMorgan analyst Doug Anmuth and others pointed out that both earnings and the stock reaction underscore how little room for error exists for hyperscale cloud service providers investing hundreds of billions of dollars in AI infrastructure—especially when core business performance disappoints. As of 9:35 a.m. New York time, Alphabet’s shares were down 13%, trading at $281.37, with $511 billion wiped off its market value. This starkly contrasts with rival Microsoft, whose cloud business posted growth exceeding Wall Street forecasts while keeping expenses in check, driving its stock higher. On Wednesday evening during the earnings call, Google Chief Business Officer Philipp Schindler noted that the newly launched AI Mode tab in Google Search is gaining traction but has weighed on the company’s results. He added that AI queries have “lower monetization potential,” though the company remains optimistic and plans to invest further in advertising within this search segment. For years, Google executives maintained that AI chatbots and related features would not significantly erode their search business. However, as consumers increasingly turn to ChatGPT, Claude, and Google’s own AI capabilities, investors worry these developments could undermine the company’s primary profit driver. Total revenue from Google’s services business in the third quarter came in at $96.3 billion, below the expected $98.4 billion. YouTube ad revenue totaled $11.2 billion, also falling short of projections. The company’s free cash flow turned negative for the second consecutive quarter—the first time it has recorded two straight quarters of negative free cash flow since going public. Alphabet’s equity investments also dragged down profits, posting an $8.7 billion loss.
