Gary Kaltbaum, President of Kaltbaum Capital Management, recently discussed the Nasdaq’s significant drop, driven by worries around technology and AI expenditures, along with Alphabet’s steep stock decline, on ‘The Claman Countdown.’
On Thursday, Alphabet, the parent company of Google, saw its market value plummet by around $500 billion as shares sank nearly 13% due to disappointing quarterly earnings. This loss marks the second-largest fall in a single day’s market value in stock market history.
The Class A shares of Alphabet ended at $283.82, reflecting a decrease of 12.64%, which led to a market capitalization reduction of around $499.8 billion, as reported by The Wall Street Journal.
This sell-off was triggered by Alphabet’s earnings report for the third quarter, which indicated revenue of $127.6 billion—an increase of 25% from the previous year but still below what Wall Street had anticipated.
Investors are increasingly anxious about Alphabet’s substantial spending on artificial intelligence along with a slowdown in growth for its core search advertising, a key revenue source.
Although Alphabet’s Google Search revenue grew by 12% year-over-year, this was a drop from the 17% growth seen in the previous quarter, raising further concerns about the company’s future growth potential in the face of evolving AI-driven search technologies.
During the quarter, Alphabet invested around $51.4 billion in capital expenditures, much of which was aimed at enhancing its data centers and computing infrastructure to support the expansion of AI capabilities.
Looking ahead, the company predicts its capital spending will be between $195 billion and $205 billion this year, with a significant increase in expenditures expected by 2027, according to previous reports from FOX Business.
Despite these concerns, there is a bright spot: Alphabet’s cloud computing division is still experiencing rapid growth.
Google Cloud revenue more than doubled to $30.7 billion, representing an astonishing 103% growth from the previous year and surpassing analysts’ expectations of $29.2 billion.
This growth shows the strong demand for AI services, but the rising costs associated with meeting that demand may create challenges for overall profitability.
Alphabet’s Chief Financial Officer, Anat Ashkenazi, cautioned that Google Cloud might undergo near-term profit margin pressures since the company is currently relying on external computing resources to fulfill demand, as indicated in previous FOX Business updates.
The recent results highlight the mounting challenges faced by major tech companies as they invest heavily in AI infrastructure, all while investors are keenly watching for signs that these investments will lead to sustainable profits.
On Thursday, Alphabet’s decline outstripped its earlier record for the largest single-day market value loss, which was about $275 billion back in July, according to Forbes.
For context, Nvidia currently holds the all-time record for the largest single-day market value drop, having lost approximately $589 billion back in January 2025.
