Google owner Alphabet suffers its worst-ever day on stock market as value plunges $500bn

Shares in Google's parent company Alphabet have suffered their worst-ever day on the US stock market, falling more than 12% and knocking around half a trillion dollars off its value.

It's the second-biggest daily market cap loss ever - just behind Nvidia's $593bn loss on 27 January 2025.

Market analysts said the share price shift was a sharp reminder for tech companies not to miss earnings forecasts at a time when investor nerves over lofty valuations, especially in the artificial intelligence (AI) space, were being tested.

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The company's latest quarterly earnings report showed Alphabet burning through cash in the AI race and Google's search division apparently suffering at the hands of AI competition.

Search revenue growth missed market forecasts by almost three percentage points, coming in at 12%.

What also spooked shareholders was a negative free cash flow of $9.07bn for the third quarter - more than triple the sum expected.

Negative free cash flow occurs when a company's cash outflows for operating activities and capital expenditure exceed the total cash it brings in from regular business operations.

A record $205bn investment bill is expected at Alphabet this year alone, as chatbots and agents change how people are searching for information in a market that Google has dominated.

Chief executive Sundar Pichai said ad queries were growing ‌at their fastest pace in five years but it was not enough to stop the bleeding.

Tech giants' valuations have bucked the trend of big growth this year, with the likes of Meta and Alphabet actually recording a dip in their market capitalisations in the year to date.

The funding of the AI investment boom has come under closer scrutiny in recent times as borrowing costs are on the rise globally amid high demand among both companies and national governments.

The rush for investment has prompted the likes of SpaceX to go public to raise cash, with its founder Elon Musk recently warning that hundreds of so-called Neocloud firms risked a "guppy-level death" because of a growing funding squeeze.

Anthropic's confirmation of its intention for a stock market flotation is another example of the need to raise cash differently.

The company behind the popular Claude chatbot is reportedly seeking to raise $100bn from the initial public offering next month.

It is seen as a crucial barometer of investor appetite as nerves over debt-fuelled ambition are coupled with risk relating to AI's safety and future capabilities.

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Kathleen Brooks, research director at the investment firm XTB, said on Thursday: "The big problem for investors when it comes to AI is the cost of the payoff.

"Hundreds of billions of dollars are being spent by the hyperscalers to boost their AI capabilities, so investors want to know that it is worth it.

"Google has now reported two quarters of negative cash flow, and this is unacceptable for investors."

She added: "The AI trade is not moving as a unified block. Investors are willing to reward good earnings results, for example, Microsoft is trading up 3.5% on Thursday morning, after it reported solid results that have impressed the market. Amazon will report results tonight, before Apple next week, which will test sentiment further."

(c) Sky News 2026: Google owner Alphabet suffers its worst-ever day on stock market as value plunges $500bn