Google parent Alphabet suffers nearly $500B Wall Street wipeout amid AI spending fears
Google Cloud revenue doubled, but massive infrastructure costs rattled Wall Street
Alphabet earnings miss sends shock waves through Wall Street
Kaltbaum Capital Management President Gary Kaltbaum joins ‘The Claman Countdown’ to analyze the Nasdaq’s steep decline amid concerns over tech and AI spending, Alphabet’s sharp sell-off and more.
Google parent Alphabet lost approximately $500 billion in market value Thursday after its shares plunged nearly 13% following disappointing quarterly earnings, marking the second-largest single-day market value loss in stock market history.
Alphabet's Class A shares closed at $283.82, down 12.64%, wiping approximately $499.8 billion from the company's market capitalization, according to The Wall Street Journal.
The sell-off followed Alphabet's third-quarter earnings report Wednesday, which showed revenue of $127.6 billion, up 25% from a year earlier but below Wall Street's expectations.
The results heightened investor concerns about the company's massive spending on artificial intelligence (AI) and slowing growth in its core search advertising business, which remains a major source of revenue.
ALPHABET, MICROSOFT EARNINGS REVEAL SURGING AI DEMAND AS SPENDING SOARS
Google CEO Sundar Pichai speaks during a Google I/O event. Alphabet shares plunged after disappointing quarterly earnings and concerns about the cost of expanding its AI operations. (David Paul Morris/Bloomberg via Getty Images, File / Getty Images)
Google Search revenue grew 12% from a year earlier, down from 17% growth in the previous quarter, adding to concerns about the company's ability to sustain growth as AI-powered search tools reshape the industry.
Alphabet spent approximately $51.4 billion on capital expenditures during the quarter, much of it directed toward data centers and computing infrastructure needed to support its expanding AI operations.
The company expects capital expenditures to reach between $195 billion and $205 billion this year, with spending projected to increase significantly in 2027, according to previous FOX Business reporting.
Despite the concerns, Alphabet's cloud computing business continued to grow rapidly.
Google Cloud revenue more than doubled to $30.7 billion, an increase of 103% from a year earlier, exceeding analysts' expectations of $29.2 billion.
NELSON PELTZ-LED GROUP OFFERS TO BUY WENDY’S FOR $1.4B
Alphabet suffered a historic stock sell-off as investors raised concerns about its massive AI spending. (David Paul Morris/Bloomberg via Getty Images, File / Getty Images)
The growth reflects strong demand for AI services, but the costs of meeting that demand could put pressure on profitability.
Alphabet Chief Financial Officer Anat Ashkenazi warned that Google Cloud could face near-term pressure on profit margins as the company relies on outside computing capacity to meet demand, FOX Business previously reported.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GOOGL | NO DATA AVAILABLE | - | - | - |
The results underscore a growing challenge for major technology companies as they pour billions into AI infrastructure while investors look for evidence that those investments will deliver sustainable profits.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Thursday's decline surpassed Alphabet's previous record single-day market value loss of approximately $275 billion in July, according to Forbes.
Nvidia holds the record for the largest single-day market value loss after shedding approximately $589 billion in January 2025.