Alphabet shares drop due to AI impact

Shares of Google's parent company, Alphabet, plummeted by up to 15.8% on Thursday, marking the largest single-day market value loss in the company's history. Quarterly financial results released on Wednesday fell short of expectations, and the "AI Mode" feature on the search engine leading to fewer ads raised concerns in the markets.

With Thursday's steep decline, Alphabet's market value shrank by over $550 billion, recording the largest single-day market capitalization loss in the company's history. This drop became the second-largest market value loss in stock market history, following Nvidia's $589 billion decline in 2025. Although Alphabet shares overall continue to hold a value of over $3.4 trillion, it led to growing concerns across Wall Street regarding when major artificial intelligence companies will generate stable returns from their massive investments. JPMorgan Chase analysts noted that the magnitude of the slowdown in Google's search business was steeper than expected.

Alphabet senior executive Philipp Schindler stated during an investor meeting that one reason for the underperformance in search ads was the "AI Mode" search feature, which results in fewer advertisements. The company stated that they are working to resolve this issue and that advertising trials on the feature have yielded promising results. Meanwhile, the company emphasized that the Gemini artificial intelligence application has reached over 1 billion users, while announcing commitments to multi-year spending exceeding $1 trillion in infrastructure, energy, and leasing agreements to run artificial intelligence systems. In its earnings report in July, the company had announced plans to spend more than $200 billion this year, double what it spent in 2025.