Alphabet loses $500 billion in market value as AI costs and search slowdown spook investors

Alphabet lost approximately $500 billion in market value on Thursday after its stock plunged over 12%, marking its worst single-day decline ever, driven by investor concerns over rising AI costs and slowing search advertising growth. The sell-off followed Alphabet's quarterly earnings report showing sales below expectations, with investors worried that AI-powered chatbots could displace traditional search and weaken its core advertising business. The company also reported negative free cash flow for a second consecutive quarter, a first since 2004. Alphabet's $51.4 billion third-quarter capital expenditure, up from $91.4 billion for all of 2025, contrasts with Microsoft's $18.6 billion free cash flow, highlighting growing investor scrutiny over whether AI investments will generate sustainable returns.