NEW YORK — Shares of Alphabet sank sharply before the opening bell on Thursday, positioning Google’s parent firm for one of the steepest single-day market value losses in U.S. history after disappointing third-quarter financial figures.
The tech giant tumbled more than 11 percent to roughly $287 per share shortly after 8 a.m. Eastern time, Business Insider reported. The drop put Alphabet on course to erase more than $400 billion from its $3.95 trillion market valuation. If that decline holds through the close, it would mark the second-largest single-day loss of market capitalization on record, trailing only Nvidia’s loss of nearly $600 billion in January 2025. It would also represent Alphabet’s sharpest post-earnings percentage retreat since the firm went public two decades ago.
Search Slowdown and Rising AI Expenses
The premarket rout followed Wednesday’s quarterly report, which showed Alphabet logging approximately $9.1 billion in negative free cash flow as capital expenditures surged for artificial intelligence data infrastructure. Total profits also fell short of Wall Street estimates.
While Google Cloud revenue managed to top expectations, the core search advertising business generated $63 billion, falling short of analyst projections and remaining virtually unchanged compared to the previous quarter. The miss ended a streak of four consecutive quarterly beats in search advertising.
During a conference call with analysts, Google Chief Business Officer Philipp Schindler acknowledged that rapid query growth in the company’s AI Mode had compressed returns. He said lower ad monetization in the format weighed on performance, Business Insider reported. Schindler noted that Alphabet is now beginning to roll out advertisements within AI Mode to broader audiences, including overseas markets.
Alphabet Chief Executive Officer Sundar Pichai defended the product shifts on the earnings call, pointing out that AI features pushed search inquiry volume to its fastest annual expansion rate in five years. Pichai drew comparisons to the company’s historical transition to mobile computing, emphasizing that user experience takes initial priority before monetization is ramped up.
Broader Tech Repercussions
The sell-off dragged on the broader tech sector, sending Nasdaq-100 futures down by more than 1 percent on Thursday morning, Fortune reported. South Korean tech manufacturer Samsung also weighed on market sentiment after posting lower-than-anticipated operating profit in its semiconductor division, sending its domestic shares down 4 percent.
Not every tech giant struggled, however. Competitor Microsoft saw its shares advance more than 3 percent overnight after exceeding quarterly revenue targets and trimming its future capital spending guidance, according to Fortune.
Pressure on tech shares was amplified by shifting monetary policy signals. The Federal Reserve maintained interest rates at its Wednesday policy meeting, but Fed Chair Kevin Warsh indicated that borrowing costs may climb in future meetings, Fortune reported. Rising interest rates generally make debt more expensive and damp investor enthusiasm for expensive growth stocks.
Investor Concerns Ahead
Analysts expressed caution about whether Alphabet can translate heavy infrastructure bets into sustainable profits amid fierce competition from standalone chatbot services like ChatGPT and Claude.
Mark Shmulik, a senior analyst at Bernstein, noted that while investors require compelling narratives around emerging technology, those visions must be backed by financial delivery. Aptus Capital Advisors portfolio manager David Wagner told Fortune that while Google’s cloud computing unit did its job, shortcomings in the remaining business units undermined the quarterly results.
Alphabet executives have indicated they will monitor whether early efforts to integrate advertising into conversational search modes can reverse the advertising revenue slump over the coming quarters.
