Google owner Alphabet lost about $500 billion in stock market value after its quarterly results disappointed Wall Street, The Guardian and Semafor reported. The shares fell by double digits on the evening of October 28 and kept falling in trading on October 29. Before the drop, the tech giant was worth $4 trillion. AFP reported that Google dragged down Wall Street stocks that day.
Net profit for July to September fell 25% from a year earlier to $26.2 billion, or $2.12 a share, The Guardian reported. That was well below analysts' forecasts. Alphabet booked an $8.7 billion loss on equity investments, which it blamed on its stake in SpaceX. Revenue rose 25% to $127.6 billion, slightly below the roughly $128 billion analysts expected.
Advertising was the weak spot. Ad revenue grew 11% to $82 billion, short of expectations. Search revenue rose 12% to $63.4 billion, slowing from 17% growth in the previous quarter. YouTube ad revenue grew 9% to $11.2 billion. Google Cloud was the bright spot. Its revenue jumped 103% to $30.7 billion, helped by sales of Google's own AI chips, known as TPUs.
Spending is what worried investors. Alphabet spent $51.4 billion on capital projects in the quarter, more than double the $24 billion a year earlier. It expects capital spending of $195 billion to $205 billion in 2026 and plans to raise it significantly in 2027. For a second straight quarter, spending outstripped the cash its businesses generated, leaving a $9.1 billion gap. To fill it, Alphabet raised $28.7 billion from bonds and $12.4 billion from new shares.
Google CEO Sundar Pichai told analysts to see the investment as "a long-range planning process, not a short-term allocation exercise." On Monday, Alphabet launched a eurobond, Semafor reported. The sale tests debt markets' appetite for AI borrowing.
The pain spread across Big Tech. AFP reported that Amazon shares dropped on a profit miss even as its cloud business accelerated. By October 30, the sell-off had wiped nearly $1 trillion off the Nasdaq in one week and about $2 trillion in a month, The Guardian reported. The Daily Nation reported that Big Tech is returning its smallest share of cash to shareholders in 15 years because of AI spending. Tech stocks recovered on Tuesday afternoon, according to The Guardian.