TLDR
- Alphabet (GOOGL) stock fell nearly 13% Thursday, its worst day since going public in 2004.
- The company lost about $482 billion in market value, the second-biggest one-day loss ever for a US-listed company.
- Search revenue grew 12% to about $63 billion, short of the roughly $65 billion analysts expected.
- Google Cloud revenue more than doubled to about $31 billion, but free cash flow swung to a loss of about $9 billion.
- The drop completed a “death cross,” and Amazon (AMZN) also fell after hours on its own record cash burn.
Alphabet (GOOGL) stock fell nearly 13% on Thursday after its third quarter results. It was the worst single day since the company went public in 2004.
The drop was steeper than the sell-offs of March 2020 and September 2008. It was also the biggest slide after an earnings report, according to Bespoke Investment Group.
Alphabet lost about $482 billion in market value, a number that is hard to picture. That is the second-biggest one-day loss ever for a US-listed company.
Only Nvidia (NVDA) has lost more, about $593 billion on Jan. 27, 2025. SpaceX (SPCX) held the No. 2 spot before this, with a $400 billion loss on June 22.
Alphabet’s previous worst day in dollar terms was about $275 billion on July 23. The stock has now lost about $1.4 trillion since its record high in May.
Search revenue grew 12% to about $63 billion, short of the $65 billion Wall Street expected. Growth was 17% in the second quarter and 19% in the first.
What Went Wrong in the Quarter
Google Services, which includes search ads, YouTube and subscriptions, brought in $96.3 billion. Analysts had expected $98.5 billion.
Operating expenses came in higher than forecast. Free cash flow swung to a loss of about $9 billion as AI spending climbed.
There were bright spots. Google Cloud revenue more than doubled to about $31 billion, and the Gemini app passed 1 billion users.
Chief business officer Philipp Schindler said fast growth in “AI Mode” queries is weighing on results. Those queries earn less than traditional search, even as total queries grew at their fastest pace in five years.
He also pointed to currency moves, weaker sales from Asian retailers tied to EU rules, and ad spending pulled into the first half by the World Cup. Google is adding more ads to AI Mode and rolling them out globally.
What Analysts Are Saying
Pivotal Research CEO Jeffrey Wlodarczak said bears will argue this is the first quarter AI is seriously hurting search. CFRA’s Angelo Zino was calmer, saying the pullback “probably represents a buying opportunity.”
The fall completed a death cross, where the 50-day moving average drops below the 200-day. Some analysts see that as a sign the price has further to fall.
NewStreet Research says Alphabet faces headwinds until it rebuilds faith in search and AI monetization. The firm estimates that could take until the first half of 2027.
OpenAI says it is on track for $1 billion in annualized ad revenue, with ads in 89 countries. Ad buyers say most of that is test money, not a shift away from Google.
After Thursday’s close, Amazon reported that Amazon Web Services grew 39%, its fastest in nearly five years. Its 12-month free cash flow fell to a record outflow of more than $42 billion, and its stock dropped in after-hours trading.
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