Google is set for a $400 billion stock wipeout after disappointing earnings
Alphabet shares are facing a significant decline following third-quarter earnings that showed search revenue falling short of analyst expectations. Despite growth in AI-driven search queries, the company is struggling to monetize these interactions as effectively as traditional search.
Why it matters
This reflects the broader market challenge of transitioning core business models to generative AI while maintaining profitability.
Google CEO Sundar Pichai. Karl Mondon / AFP via Getty Images Shares in Google's parent company were down 10% in premarket trading on Thursday. While AI is driving more search queries, search revenue disappointed, raising concerns. The drop would be the biggest negative stock reaction to earnings since Google went public in 2004. Alphabet's share price is tumbling on Thursday after it reported that Google's AI search mode isn't making as much as expected in its latest earnings. As of around 7:20 a.m. ET, Alphabet's stock was set to open at $287.92, down 10.5% from Wednesday's close. That drop would equate to a loss of more than $400 billion from the company's market capitalization, which stood at $3.95 trillion on Wednesday. In Wednesday's earnings call, CEO Sundar Pichai said AI helped search queries grow at the fastest year-over-year pace in five years. However, the financials are lagging behind.
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