Alphabet shares fell 12% on Thursday, wiping out $500bn in market value in one of the biggest single‑day losses in recent history. The drop was the company’s worst day on record, surpassing losses during the COVID‑19 pandemic and the 2008 crisis.
The sell‑off followed Q3 earnings that showed sales below analysts’ expectations, especially in the search‑advertising segment that has long been the company’s revenue engine. Investors worry that AI‑powered chatbots could erode the traffic that fuels Google’s ad sales.
Capital expenditure in the third quarter hit ₹51.4 billion, a figure that dwarfs the ₹91.4 billion projected for the rest of 2025. The outlay is aimed at expanding data‑centre capacity for AI services, but the return on this spend remains uncertain.
Free cash flow turned negative for the second consecutive quarter, a first for Alphabet since it went public. In contrast, Microsoft reported ₹18.6 billion in free cash flow for the same period, despite similar AI‑infrastructure investments.
With the market now demanding a clearer ROI from its AI push, Alphabet faces pressure to demonstrate that its massive spend will translate into sustainable growth without eroding the cash‑generating search business.