Economy

Alphabet shares plunge a record 12.6% after earnings miss, reviving AI-spending doubts

New York • October 30, 2026 • By Press Pass USA

Editorial illustration: traders watching a large screen with a steep red downward chart line

Editorial illustration — Press Pass USA

Google parent Alphabet fell 12.6% on Thursday, its worst day in more than 20 years as a public company, after third-quarter results missed Wall Street expectations and accelerating artificial-intelligence spending drove a $9.07 billion cash burn.

Alphabet reported third-quarter revenue of $127.6 billion on Wednesday, up 25% from a year earlier but short of analysts' estimate of $128.2 billion, according to LSEG data cited by Reuters. Net income available to common shareholders fell 25% to $26.17 billion. Shares had already dropped more than 10% in extended trading Wednesday evening, wiping nearly $400 billion off the company's market value, before Thursday's session extended the fall to about $500 billion in lost value, Reuters reported.

The miss came from Google's core advertising business, which reported $82.01 billion in revenue, about $1.41 billion short of expectations. That offset a bright spot in the cloud division: Google Cloud revenue more than doubled to $30.71 billion, beating estimates, but it was not enough to make up for the advertising shortfall.

Investors focused most on the cash burn. Alphabet reported negative free cash flow of $9.07 billion, compared with analyst expectations that it would come close to breaking even, and up from $5.9 billion in the prior quarter — which had been the company's first negative quarter in its 22-year history as a public company. Chief Financial Officer Anat Ashkenazi said capital expenditures, driven by AI, will increase significantly in 2027, while this year's capex forecast was unchanged.

The sell-off dragged the tech-heavy Nasdaq Composite down 1.38% to 26,184.72 on Thursday, while the S&P 500 slipped 0.30% to 7,720.39 and the Dow Jones Industrial Average fell 0.25% to 52,342.56. The damage was concentrated: communication services stocks fell 6.6%, their biggest drop since February 2022, even as four in five S&P 500 stocks rose.

The Alphabet rout landed in a week already testing the market's mood. The Federal Reserve held interest rates at 3.75% to 4% on Wednesday, with two policymakers dissenting in favor of a hike, and new data Thursday showed third-quarter GDP growing at a 3.4% annualized pace while September PCE inflation rose to 3.6% from a year earlier. For investors, Alphabet's report revived the central question of the AI boom: whether the massive spending on data centers and computing capacity will pay off fast enough to justify its cost.

Sources: Reuters (Oct 28–30, 2026); Reuters Trading Day column (Oct 29, 2026); The Associated Press via syndicated reporting (Oct 29, 2026); LSEG data via Reuters.