Alphabet suffers record sell-off as search slowdown rattles investors

Alphabet shares sank 12.6% Thursday, their worst one-day decline ever, erasing $500 billion in market value after quarterly revenue missed expectations and advertising sales disappointed. The loss was the second-worst single-day market-value wipeout in U.S. history, underscoring investor anxiety about when massive AI investments will generate consistent returns.

JPMorgan Chase analysts described the slowdown in Google’s search business as steeper than expected. Alphabet executive Philipp Schindler told investors that Google’s AI Mode was contributing to weaker search advertising revenue by displaying fewer ads. He said advertising experiments within the feature had shown promising results. Executives also highlighted more than 1 billion users of the Gemini AI app.

Alphabet disclosed more than $1 trillion in multiyear spending commitments for infrastructure, energy and leases supporting AI systems. It previously outlined plans to spend more than $200 billion this year, double its spending in 2025, and raised almost $80 billion in capital in June for the AI build-out.

The sell-off spread across companies tied to data center expansion. The Nasdaq Composite fell 1.38%, the Philadelphia semiconductor index dropped 1.4%, and Caterpillar shares plunged 9.2% despite revenue exceeding expectations. Amazon shares also slid 10% in after-hours trading after its quarterly revenue fell short of Wall Street forecasts.