Shares of Google parent company Alphabet sank on Thursday by as much as 15.8%, putting the company on course for its worst single-day drop in history.
The plunge also instantly wiped out more than $550 billion in market capitalization, also ranking as the company’s worst one day market value loss ever. It also ranks as the second-worst wipeout in market history, only behind Nvidia’s $589 billion drop in 2025.
Google is still America’s fourth largest company by market value, and its shares are worth more than $3.4 trillion, all told.
But the sharp drop in its stock price Thursday was the latest sign of a broader anxiety creeping through Wall Street over how long it will take big artificial intelligence companies to see consistent returns on their massive investments.
The significant selling came after the company reported its latest quarterly financials Wednesday, revealing that revenues fell short of Wall Street expectations.
It also reported lackluster advertising sales.
The “magnitude” of the slowdown in Google’s search business was “steeper than expected,” JPMorgan Chase analysts wrote in a Thursday morning note.
A senior Alphabet executive told investors Wednesday that part of the reason ad revenues from search were underperforming was because of Google’s own “AI Mode” search feature, which was resulting in fewer ads.
The company is working on addressing this, senior vice president Philipp Schindler said on the investor call, adding that “ad experiments” in the feature have “shown promising results”
Company executives tried to soften the blow for investors by touting more than 1 billion users of its Gemini AI app.
But all that AI is coming at a massive cost to Alphabet, which disclosed that it has committed to more than $1 trillion worth of multi-year spending agreements to fund the infrastructure, energy and leases required to run AI systems.
The company said during its July earnings report that it planned to spend more than $200 billion this year, which is double what it spent in 2025. The company in June also raised almost $80 billion in capital, also to spend on the ever-expanding AI buildout.
Alphabet’s disappointing results also came against the backdrop of better results from its peer Microsoft, whose shares initially rose in after market trading Wednesday and overnight, before reversing course to fall about 2% by 10:50 a.m. ET Thursday.
The big drop in Alphabet shares dragged down the Nasdaq Composite index, which was down 1.6% by mid-morning. The S&P 500 fell slightly less, by about 0.6%.
Stock in the chip companies that supply equipment for AI data centers followed Alphabet shares lower, with the Philadelphia semiconductor index dropping 1.6%.
The bleeding even spread beyond the tech sector, as shares of construction equipment giant Caterpillar — a key supplier of the machines required to build data centers — plunged 9% early Thursday.
Caterpillar’s recent earnings report revealed that the company’s revenues beat Wall Street expectations, but by less than many traders had hoped.
As investors clamor for ever-higher returns from companies linked to the costly AI buildout, stock in firms that only narrowly top earnings targets, like Caterpillar, have been punished with dramatic sell-offs.
