Google is set for a $400 billion stock wipeout after disappointing earnings

• Alphabet stands to lose $400 billion in market value with its stock down 11% in premarket trading.
• That would be the second-largest one-day drop in market cap for any company in stock-market history.
• Shares of Google’s parent company fell after its earnings disappointed investors.

Alphabet is barreling toward the second-biggest one-day plunge in market value in US stock-market history.

Shares of Google’s parent company were down more than 11% at about $287 as of 8:11 a.m. ET on Thursday, paving the way for Alphabet’s $3.95 trillion market capitalization to tumble by over $400 billion.

Additionally, it would be the second-largest one-day loss of market capitalization ever. Only AI chipmaker Nvidia has lost more value in a single day, when it shed close to $600 billion on January 27, 2025, on fears that China’s DeepSeek would steal its lunch.

Alphabet’s shares slumped after its earnings report on Wednesday showed about $9.1 billion in negative free cash flow as it spent heavily on AI infrastructure, and profits that fell short of Wall Street’s forecasts.

Search revenue of $63 billion came in below analysts’ estimates, and was virtually flat compared to the previous quarter.

That came as a shock because search revenue had beaten Wall Street’s estimates in each of its four previous quarterly earnings reports.

“It’s worth noting that the strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode,” Philipp Schindler, Google’s chief business officer, said on the call.

He also announced that Google is introducing ads in AI Mode to more users, including in international markets for the first time.

The rise of generative AI has shaken up Google’s core business as chatbots like ChatGPT and Claude give people an alternative way to search. While Google has its own chatbot, Gemini, and has integrated it into its search engine with AI Mode, revenue is lagging behind its popularity.

“Just like our shift to mobile over a decade ago, we are focused on building the best Search user experience, followed by monetization,” Pichai said.

As well as one of the market’s biggest-ever single day value losses, if Alphabet stock closes more than 9.77% lower on Thursday, it would be the company’s worst post-earnings percentage drop since going public in 2004.

“In the AI trade you need a clean story to pique investor interest. But it only matters if numbers track in the right direction,” Mark Shmulik, a senior analyst at Bernstein, wrote in a note.

“Is Google an AI winner? Probably, but not today.”

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