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New York, Oktober 30, 2026 – On Thursday, Alphabet suffered a historic reckoning. Nearly $500 billion in market value vanished in one session, the worst day in the Google parent’s twenty year history and a signal that its AI gamble is now being judged.
Shares fell 12.3 percent to $282.35 after third quarter results rattled investors who assumed its search monopoly was untouchable.
At its low, the decline hit 13 percent, briefly erasing more than $500 billion, the second largest loss ever for an American firm.
The alarm came from the core business. Search revenue grew 12 percent to $63.4 billion, roughly half of Alphabet’s sales, but below expectations by almost three points and a sharp slowdown from prior quarters.
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The miss stung because activity was accelerating.
Chief Executive Sundar Pichai said the company logged its highest number of queries in five years.
The problem is how people search. Growth is shifting to AI Mode, conversational answers atop Google results that compete with chatbots.
Those queries surge but monetize poorly.
Chief business officer Philipp Schindler acknowledged that strong growth in AI Mode hurt revenue due to lower monetization.
He said Google is testing ads inside AI Mode and will expand them to several countries including Britain this quarter, with promising early results.
The second shock was spending. Capital spending hit $51.4 billion, pushing free cash flow to negative $9.07 billion, more than triple forecasts and only the second negative quarter since its 2004 listing.
Full year spending is expected at $195 billion to $205 billion, with finance chief Anat Ashkenazi warning it will increase significantly in 2027.
Long term debt has risen to $125.1 billion from $46.5 billion at the end of 2025, highlighting how the AI buildout is debt financed.
Microsoft fell 1.5 percent Thursday on reports it planned a $25 billion bond sale despite beating forecasts.
For investors, the quarter exposed a fundamental dilemma.
Google must defend search dominance while replacing high margin keyword ads with a less profitable format.
As Forrester analyst Tracy Woo noted, funding massive AI investments while preserving established businesses is harder than markets assumed.
Thursday showed how quickly confidence reverses when that balance falters.
