Google's AI search overhaul costs $500 billion in market value

Alphabet shares plunged 12.6% on October 29, the steepest drop since its 2004 market debut, erasing $500 billion in market value. The collapse followed third-quarter results that missed Wall Street expectations. Revenue reached $127.6 billion but fell short of forecasts, while search ad growth slowed. Alphabet posted a negative free cash flow of $9.1 billion, its first in 22 years, driven by over $50 billion in AI infrastructure spending. Google's AI overhaul, which replaced classic search links with Gemini-generated answers, has disrupted its ad model. Google Cloud revenue doubled to $30.71 billion, offering a partial offset amid rising interest in alternative search engines.