Alphabet (GOOGL) Shares Plunge After Search Falls Short and Cash Burn Grows

What happened

Shares of Google’s parent company Alphabet (GOOGL) plunged 12.6% on Thursday after its third-quarter search revenue, profit, and cash flow all fell short of what Wall Street wanted. It was the stock’s worst day since Google went public in 2004, Yahoo Finance and IBTimes reported.

In results released after Wednesday’s close, revenue rose 25% to $127.58 billion, just below the $128.2 billion analysts expected, according to LSEG data cited by Reuters. Search revenue grew 12% to $63.35 billion, short of the roughly $65 billion Wall Street expected, Yahoo Finance and SiliconANGLE reported. Earnings of $2.12 a share missed the $3.02 analysts expected, Finbold and IBTimes reported, and an $8.66 billion loss on stakes Alphabet holds in other companies cut 55 cents from that figure, the release showed.

“The bears will argue this is the first quarter that AI is starting to seriously hurt their search business,” Pivotal Research Chief Executive Jeffrey Wlodarczak said, describing the bear case, as quoted by Yahoo Finance and IBTimes. The shares closed at $283.82, down 12.6% from the previous close.

Why it matters

Investors have two worries, and this report fed both. The first is that AI chatbots draw people away from Google search, which still brings in about half of Alphabet’s revenue.

The second is cost: Alphabet spent $51.36 billion on property and equipment in the quarter, more than double the $23.95 billion a year earlier. Free cash flow, the cash left after that spending, was negative $9.07 billion, the second negative quarter in a row.

More is coming. Alphabet kept its 2026 spending forecast at $195 billion to $205 billion, and “we continue to expect our CapEx to increase significantly in 2027,” Chief Financial Officer Anat Ashkenazi said, as quoted by IBTimes. That overshadowed Google Cloud, whose revenue more than doubled, up 103% to $30.71 billion.

Bank of America cut its price target to $380 from $430, Investing.com and Finbold reported, and Yahoo Finance calculated that the drop erased about $482 billion of market value, the second-biggest one-day loss for a US-listed company after Nvidia’s $593 billion in January 2025.

What the market is telling us

Alphabet’s shares moved 5% or more on 6 of the last 252 sessions. The stock is down 9.3% this year, and at $283.82 it sits 29.5% below its 52-week closing high of $402.62 from 13 May 2026. $1,000 invested in Alphabet five years ago would be worth $1,917 today.

A cloud business growing 103% is a real asset, but until search growth steadies and cash flow turns positive again, we think investors will keep pricing Alphabet on its spending rather than its sales.