Historic drop in Alphabet shares: $500 billion in market value lost

Shares of Google's parent company, Alphabet, fell 12.6% on Thursday, marking the sharpest single-day decline in the company's history, amid growing concerns on Wall Street regarding the financial returns of its artificial intelligence investments.

The $500 billion loss in market capitalization experienced by Alphabet was recorded as the second-largest single-day drop in U.S. stock market history. The company disappointed investors with its latest quarterly financial results, as advertising revenues fell short of expectations. JPMorgan Chase analysts noted that the slowdown in Google's search engine business was sharper than anticipated.

Company management explained that one reason for the decline in search advertising was Google's own 'AI Mode' search feature, which leads to fewer ad impressions. Alphabet announced multi-year spending commitments exceeding $1 trillion for AI infrastructure, energy, and leasing expenses. The company plans to invest more than $200 billion this year, which is double its 2025 spending.

This sharp decline in Alphabet caused the Nasdaq index to fall by 1.38% and the S&P 500 index by 0.3%. The negative sentiment in the technology sector also spread to the industrial sector, with shares of Caterpillar, a supplier of equipment used in data center construction, falling by 9.2%.