Google parent company Alphabet suffered the worst one-day market capitalization collapse in its history on Thursday, wiping $510 billion from its valuation following a sharp sell-off. The dramatic downturn was triggered by third-quarter financial results that missed expectations, driven by slowing growth in advertising and search revenue as well as heavy capital expenditures in artificial intelligence.
The Nasdaq-listed firm’s total market capitalization dropped to $3.46 trillion, down from $3.97 trillion on Wednesday. According to market data, the rout marked the worst single-session decline in Alphabet’s history and stands as the second-largest one-day loss ever recorded in the U.S. stock market, trailing only chipmaker Nvidia, which saw $589 million erased in a market drop on Jan. 27, 2025.
The sell-off sent broader shockwaves across Wall Street, pulling the Nasdaq Composite Index down 1.4% to close at 26,184.72 points. The S&P 500 and Dow Jones Industrial Average also dipped, while subsequent gloomy earnings reports from Amazon and Intel after the closing bell prompted investors to pivot heavily into U.S. Treasuries, driving government borrowing costs downward.
While Alphabet reported a 25% year-over-year increase in total revenue to $127.6 billion for the July-to-September quarter, core advertising sales underperformed. Executives acknowledged that the company’s default AI search mode contributed to the advertising slowdown. Despite seeing strong growth in user adoption, the AI-driven search function currently yields lower monetization than traditional search formats.
Adding to investor concerns, Alphabet reported AI investments exceeding $50 billion for the period, resulting in expenditures that outpaced revenue by $9.1 billion. Overall quarterly profit fell 25% to $26.2 billion, compared with $35 billion during the same period in 2025.
Bright spots in the earnings report were largely confined to Google Cloud, where revenue more than doubled to just under $31 billion, surpassing analyst expectations. However, this growth was insufficient to offset broader concerns regarding advertising efficiency and soaring capital costs.
Addressing investors during an earnings call, Alphabet Senior Vice President Philipp Schindler stated that the company is actively working to mitigate the monetization lag associated with its AI search features. Schindler noted that the firm’s ad experiments have yielded promising results, allowing Alphabet to scale advertisements within both AI Overviews and AI Mode to a broader audience, including international markets and multi-turn queries in the United States.
