Alphabet shares plunge about 13% in $500bn rout on AI concerns

· Finance · United States

Alphabet shares fell nearly 13% on Thursday, their worst single day on record, wiping about $500 billion off its market value. The Google owner's sales and profits undershot expectations, and the company reported a larger negative free cash flow than analysts had anticipated while keeping its capital spending guidance for the year unchanged. Management also acknowledged that 'AI mode' — the company's AI-driven search experience — has hurt its traditional search business. The disclosures fed a broader rotation out of the AI trade: investors have grown anxious that the heavy spending pouring into data centers and models is not yet translating into returns. The move dragged on the wider technology sector and on Nasdaq futures.

Why it matters：The selloff marks the first time a megacap has quantified AI search cannibalizing its core advertising franchise, a warning that could reprice the entire AI infrastructure spending cycle.

Key points

  • Free cash flow came in more negative than analysts expected, with spending guidance left intact.
  • The company said 'AI mode' has hurt traditional search, its most profitable business.
  • The $500 billion market value loss was Alphabet's worst single-day drop on record.

Sources (original reporting)

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