What happened
Alphabet shares fell more than 13%, wiping out over $500 billion in its biggest-ever market plunge, after third-quarter sales excluding partner payouts of $111.2 billion missed analysts' projections.
Why it matters
Search and other ad sales, roughly half of overall revenue and key to funding AI infrastructure, missed forecasts and grew at the slowest pace in five quarters, reinforcing investor concerns about AI's threat to the core business.
Summaries like this, every morning.
For years, Google executives have argued that AI chatbots and features won't cut significantly into its search business, even as investors worried about AI's impact. The third-quarter results landed on the side of those concerns: search and other ad sales, a business line accounting for roughly half of overall revenue, missed forecasts and grew at the slowest pace in five quarters.
The share reaction was severe — a fall of more than 13% and a loss of more than $500 billion, described as the biggest-ever market plunge for Alphabet. That ad business is critical to financing the company's massive AI investments, so a shortfall there speaks directly to how much room for error exists.
JPMorgan analysts including Doug Anmuth framed it that way, saying the results show the margin for error when a hyperscaler (large cloud provider) spending hundreds of billions on the AI infrastructure buildout posts disappointing results in its core business.
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