Google Cloud more than doubled its sales last quarter. Investors are selling Alphabet anyway.
Shares of Alphabet Inc. (GOOGL) (GOOG) sank 11% in Thursday's premarket trading after the Google parent's third-quarter earnings missed expectations. The stock is now on course for its worst session in more than six years.
Class A shares traded at $288.43 before the opening bell, down 11.2% from Wednesday's $324.89 close, according to market data.
If the decline holds, it would be the steepest one-day drop since March 16, 2020, when the stock lost 11.6% during the COVID-19 crash. It would also surpass the 9.5% plunge of Oct. 25, 2023, the last time an earnings report hit the shares this hard.
At current prices, the selloff would wipe out roughly $444 billion of Alphabet's market value.
That would rank as the second-largest one-day loss for any company in stock market history.
Only Nvidia (NVDA) has lost more. The chipmaker shed roughly $589 billion on Jan. 27, 2025, after the DeepSeek release rattled the AI trade.
Alphabet would also overtake Microsoft (MSFT), which gave up about $357 billion on Jan. 29, when investors balked at its AI spending.
Alphabet Earnings Fell Even as Revenue Jumped 25%
Alphabet reported third-quarter revenue of $127.58 billion, up 24.7% from a year earlier but short of the $128.20 billion analysts had expected.
The bottom line was weaker. Net income fell 25.2% to $26.17 billion, and diluted earnings per share dropped to $2.12 from $2.87, well below the roughly $3 consensus.
However, Search is where investors are focused.
Search and other advertising revenue grew 12%, slowing from 19% in the first quarter and 17% in the second. Paid clicks rose 8%, cost per click increased 4% and network revenue was nearly flat.
In addition, management flagged larger foreign-exchange headwinds in the fourth quarter, particularly for Search and YouTube ads, as well as tougher comparisons against a strong year-earlier period.
Google Cloud Growth Is Not Enough for Alphabet Stock
The cloud business told a different story. Google Cloud revenue more than doubled to $30.7 billion, helped by infrastructure demand and sales of Tensor Processing Units, Google's custom AI chips, which it now sells as full systems.
Executives said nearly 100 clients currently use TPUs. They also expect to recognize just over 55% of the cloud backlog as revenue over the next 24 months.
Meanwhile, the spending bill keeps climbing. Alphabet's capital expenditures reached $132 billion in the first nine months of 2026, and the company left its full-year capex forecast unchanged.
That tension was exactly what investors were weighing overnight.
“Google just released maybe the most disappointing Earnings in its history. I don't say that lightly,” Michael Spencer wrote in his AI Supremacy newsletter on Thursday.
Spencer argued that Alphabet is finally diversifying beyond advertising through TPUs and Google Cloud. However, he warned that the shift comes at a cost.
“The transition is so bumpy, you'd be hard pressed not to question the plan,” he wrote.
The bigger worry, in his view, is what AI is doing to Search itself. Google query volumes remain high, but fewer of those searches send users to outside websites.
“How do you monetize zero click journeys well? It's the beginning of the end of an era,” Spencer wrote.
Nasdaq Futures Feel the Hit
Alphabet's slide weighed on the broader tech complex.
Nasdaq 100 futures fell 1.1%, while S&P 500 futures slipped 0.3%.
The Invesco QQQ Trust (QQQ) dropped 1.1% premarket. The State Street Communication Services Select Sector SPDR ETF (XLC), where Alphabet is a top holding, lost 1.7%.
The size of the record now depends on the close. A finish below about $287.11 would make Thursday's loss deeper than the March 2020 drop.
