Alphabet shares fall 12% as USD 500 billion wiped off value

Alphabet shares suffer worst-ever single-day fall, USD 500 billion wiped off market value amid AI spending concerns

Washington, October 30

The decline was larger than any single-day fall recorded during the COVID-19 pandemic or the 2008 financial crisis, the report said. It also marked the second-largest single-day loss in market value in history, after chipmaker Nvidia's nearly USD 600 billion decline in early 2025.

The sell-off followed Alphabet's quarterly results, which reported sales below analysts' expectations. Investors were particularly concerned about the outlook for Google's search advertising business, which faces growing competition from AI-powered chatbots that could change how consumers access information online.

The report said investors were worried that the shift towards AI-based search could happen faster than Google can respond and adapt its business.

At the same time, Alphabet's growing expenditure on AI infrastructure has raised questions about how quickly the company can generate returns from its investments.

The company reported USD 51.4 billion in capital expenditure in the third quarter alone, compared with USD 91.4 billion for the entire year in 2025. Its spending includes investments in data centres and other infrastructure required to support AI development.

CNN reported that Alphabet had also recorded a second consecutive quarter of negative free cash flow. This is particularly significant as the company had not reported a negative figure in any quarter since going public in 2004, before becoming Alphabet in 2015.

The decline in free cash flow has raised concerns that higher AI investments could leave less money available for shareholder returns through dividends and share buybacks.

In contrast, Microsoft reported USD 18.6 billion in free cash flow in the third quarter, despite continuing to invest heavily in AI infrastructure. Its shares ended Thursday's session largely unchanged, while Alphabet fell more than 12 per cent.

Investors are increasingly assessing whether large technology companies are spending sustainably and whether their AI investments can generate sufficient returns.

CNN cited Richard Reyle, chief investment officer at Questar Capital Partners, as saying, "We are now getting to see who is spending rationally on AI and who is not."

The report said concerns over the scale of data centre investments, rising funding requirements and uncertainty around the profitability of AI could continue to weigh on technology companies as they expand their infrastructure.

— ANI