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Alphabet shares suffer worst day on record, falling about 13% and losing about $500 billion after weak Q3
Alphabet's shares fell about 13% on Thursday, their worst day on record, erasing roughly $482 to 500 billion after third-quarter revenue and ad sales missed expectations. Investors questioned whether huge AI spending will pay off. The Nasdaq fell 1.38%; ServiceNow and Caterpillar also slumped.
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Alphabet's shares fell about 12.6 to 13 per cent on Thursday, 29 October, their worst one-day drop on record, after the company's third-quarter results showed weak revenue and advertising sales. The fall erased about 500 billion dollars of market value, or about 482 billion dollars on one calculation, leaving the company worth about 3.47 trillion dollars, still America's fourth-largest company. It is the second-largest one-day loss of value in the history of US markets, behind Nvidia's loss of more than 589 billion dollars in January 2025.
What the results showed
Alphabet reported on Wednesday after the market closed. Revenue was below analysts' expectations, and advertising sales were weak. One analyst at JonesTrading said the company missed forecasts "on essentially every key metric except cloud revenue." One report put earnings per share at 2.12 dollars against the 3.02 dollars that analysts had modelled, and said that the company had recorded a second quarter of negative free cash flow. Those two figures come from a single report.
Analysts at JPMorgan Chase said that the slowdown in Google's search business was steeper than expected. Philipp Schindler, the company's senior vice president, said that Google's own AI-powered search feature was reducing the number of ads shown, which hurt search advertising revenue, and that the company is working on the issue and that ad experiments in the feature have shown promising results. Executives pointed to more than one billion users of the Gemini app.
The sale was not only about one quarter. Alphabet has committed more than one trillion dollars to multi-year spending agreements for AI infrastructure, energy and leases, and in July it said it planned to spend more than 200 billion dollars in 2026, roughly double its 2025 spending. It raised almost 80 billion dollars in capital in June. The weak results renewed doubts about whether such spending can pay off quickly enough to justify high valuations, and about whether AI is a threat to Google's search business. Chris Larkin of E*Trade said that "AI uncertainty may not have run its course yet."
The rest of the market
| Index or stock | Move on Thursday |
|---|---|
| Alphabet | down about 12.6% to 13% |
| Nasdaq Composite | down 1.38% |
| S&P 500 | down about 0.3% |
| Philadelphia Semiconductor Index | down 1.4% |
| ServiceNow | down 27%, its largest fall on record |
| Fortinet | down 20% |
| Caterpillar | down 9.2% to 9.3%, its worst fall since March 2020 |
| DoorDash | up 5.6% after announcing a 17 billion dollar deal to buy Instacart |
The S&P 500 and the Nasdaq had been rising for three days. The equal-weighted S&P 500 rose 1.2%, and about 400 stocks in the benchmark gained, which shows that the sell-off was concentrated in technology and in companies tied to the AI build-out. Caterpillar, which makes power-generation equipment used in data centres, fell despite a modest earnings beat. Microsoft reported strong cloud growth and kept capital spending in check, but its shares slipped 0.2 per cent, and its 25 billion dollar bond sale drew strong demand. Amazon shares were set to fall about 10 per cent in after-hours trading after its revenue missed expectations.
Stock indexes also fell after President Donald Trump said the Iran war would end soon, following a report that the United States had told Gulf states to prepare for a short, intense campaign after the midterm elections.
Indian technology companies have clients that spend on cloud and AI, and in Indian trade on Friday the Sensex and the Nifty rose in early trade on buying in IT shares, according to market reports. The fall in Alphabet is a reminder that the market is now asking for evidence of returns from the very large AI investments of the biggest US companies, which affects the valuations of firms across the technology chain, including those in India.
The next tests are the companies' own guidance on capital spending, whether advertisers shift budgets to AI-powered products, and how other large technology firms report. Alphabet's results also bear on its plans to sell its own AI chips to other companies, an effort that the company has said will bring revenue mostly in 2027. Share prices can recover as quickly as they fall, and a single-day move says little about the company's long-term position. This article is for information and is not investment advice.
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