Alphabet

Down 12 Percent: Google Stock Has Its Worst Day Since Its I.P.O.

co-produced by AI29. October 2026, 18:13

Alphabet shares suffered their worst day since the company's I.P.O. © Adarsh Chauhan on Unsplash

Record revenue, a cloud boom, a billion Gemini users, and investors are running for the exits anyway. Shares of Google’s parent company, Alphabet, plunged as much as 13 percent on Thursday and were most recently down about 12 percent. According to Yahoo Finance, the stock is heading for its steepest one-day drop since the company went public in 2004. At one point, roughly $500 billion in market value evaporated, leaving Alphabet worth about $3.46 trillion.

A Loss of Historic Proportions

According to Yahoo Finance, a decline of that size would be the second-largest single-day loss in market value ever suffered by a U.S. company. Only Nvidia’s plunge in January 2025 was bigger, when the Chinese A.I. model from DeepSeek rattled markets and the chipmaker lost about $593 billion. Alphabet’s previous worst day came only in July of this year, when about $275 billion was wiped out.

The trigger was the quarterly report released on Wednesday evening. At first glance, the numbers looked good: Revenue rose 25 percent to $127.6 billion, the cloud division doubled to $30.7 billion and operating income climbed 30 percent. On closer inspection, however, investors found several reasons to worry.

Why the Stock Fell

A.I. spending: Alphabet spent $51.4 billion on data centers, servers and chips in the third quarter alone, more than twice as much as a year earlier. It plans to spend $195 billion to $205 billion for the full year, and spending is set to rise significantly again in 2027.
Negative cash flow: Because its investments exceed the cash generated by its operations, free cash flow was negative for the second quarter in a row, at minus $9.1 billion. To fund its spending, Alphabet issued $28.7 billion in bonds and sold new shares.
Missed earnings: Earnings per share came in at $2.12, well below expectations of about $3. One reason is losses of about $8.7 billion on stakes in other companies, including SpaceX, according to several reports.
Weaker search: Revenue from Google Search grew only 12 percent to $63.4 billion, while analysts had expected about $65 billion, according to Yahoo Finance. Google executive Philipp Schindler mainly blamed currency effects but also acknowledged that the A.I. Mode in search brings in less advertising money per query.

That last point feeds a long-standing fear. Jeffrey Wlodarczak, chief executive of the research firm Pivotal Research, told Yahoo Finance that pessimists would argue this is the first quarter in which A.I. has started to seriously hurt the search business.

That fits a figure Trending Topics has already reported on: At $63.4 billion out of $127.6 billion, the “Google Search & other” segment accounted for less than half of Alphabet’s revenue for the first time in the third quarter, at 49.7 percent. A year earlier, its share was still 55.3 percent. The core business that made Google big is losing weight. That is partly due to the strong growth of the cloud, but also because search itself is growing more slowly than the rest of the company.

Microsoft Fares Better

The contrast with the competition is striking. Microsoft, which reported results the same evening and posted 48 percent growth for its Azure cloud platform, saw its shares rise, according to Investing.com. Microsoft is also investing heavily in A.I. infrastructure, but investors apparently have more confidence that its spending will pay off quickly. Alphabet faces the added problem that it is putting pressure on its own core business, the search engine, with its own A.I. Mode.

Analysts See a Buying Opportunity

Not all observers share the panic. Angelo Zino of the research firm CFRA described the drop as a likely buying opportunity, according to Yahoo Finance. Canaccord and Pivotal Research are sticking with their buy ratings, according to Investing.com, with price targets of $450 and $475, far above the current price of about $285. DA Davidson, by contrast, cut its price target to $300 and sees the heavy financing needs as a burden for the coming months.

For the optimists, the cloud is the main argument: With an operating margin of 36 percent, the division is now highly profitable, and Alphabet says its backlog stands at $561 billion. If it succeeds in turning that backlog into revenue, the multibillion-dollar investments could pay off.