Shares of Alphabet, the parent company of Google, recorded their worst day in US stock market trading history. The share price fell by more than 12 per cent, reducing the company's market value by approximately half a trillion dollars.
This is the second-largest single-day loss in market capitalisation in history, behind only Nvidia. Nvidia lost $593 billion in market value on 27 January 2025.
The latest quarterly financial report showed that Alphabet is spending vast amounts of money in the race to develop artificial intelligence. Growth in revenue from Google's search engine was almost three percentage points lower than market expectations, coming in at 12 per cent. A negative free cash flow of $9.07 billion was also recorded in the third quarter, which is more than triple the expected negative amount. Alphabet is expected to invest a record $205 billion this year alone.
Chief Executive Officer Sundar Pichai stated that the number of queries related to advertising is growing at the fastest pace in the past five years. Despite this, companies such as Meta and Alphabet have seen their market capitalisation fall since the start of the year.
Kathleen Brooks, research director at investment firm XTB, said on Thursday that the biggest problem for investors in the artificial intelligence sector is the cost of achieving expected results. Brooks said that hundreds of billions of dollars are being spent on enhancing artificial intelligence capabilities in the largest technology companies and that Google has now recorded two quarters of negative cash flow.
Microsoft shares rose by 3.5 per cent on Thursday morning after the company announced solid results. Amazon will publish its results tonight, while Apple will do so next week.
