Alphabet stock recorded its worst-ever day on Thursday, dropping 12.29 percent by close of day; Alphabet is the owner of Google, among other companies. The drop came despite the very strong revenue growth Google reported in a Q3 earnings call.
It was the largest single-day drop for Google stock, according to Yahoo Finance, and the decline erased almost $500 billion in value in a matter of hours. Per Yahoo, it was also the second-largest one-day loss ever recorded for a company listed in the United States. The sums involved are truly astronomical.
To put $500 billion in perspective: If you stacked $5 billion worth of $100 bills on top of each other, the resulting tower would rise above the atmosphere and about 90 miles beyond the International Space Station. Or, put it like this: If you spent $1 million every day, it would take you 1,369 years to spend $500 billion.
As one of the world’s largest companies by market value, the impact extended far beyond Google, affecting other tech stocks; moreover, the Dow Jones, S&P 500, and Nasdaq all experienced losses overall on Thursday, per Yahoo.
Why are the markets so spooked?
Google’s third-quarter earnings filing revealed that the company faces significantly more risk than it discussed in its Q3 earnings call, according to Bloomberg. In addition to the more than $1 trillion in future purchase commitments Google faces, Bloomberg reported that Google’s quarterly filing listed an additional $98.5 billion in possible commitments. The discrepancy showed just how much exposure Google has if the AI spending spree — which you can imagine as a giant, slowly expanding bubble — fails to deliver.
Mashable Light Speed
That’s not the only red flag scaring investors, either.
Google also reported negative cash flow for the third quarter. The company reported negative cash flow for the first time last quarter.
Not everyone is pessimistic about Google’s stock or the AI spending spree, however. Google did report 25 percent revenue growth, thanks in large part to its cloud services. Google’s latest frontier AI model, Gemini 4 Carbon, is also at the top of the Artificial Analysis Intelligence Index. And the massive capital expenditures on AI could prove profitable in the long term; the tech industry is clearly betting this is the case.
But as today’s sell-off shows, if AI investments don’t pay off, that bet would have wide-ranging impacts on the economy at large.
Want more tech and digital culture news delivered to your inbox daily or sent straight to your device? Sign up for Mashable’s Top Stories newsletter or get Mashable push alerts today.
Topics
Artificial Intelligence
Google
