Quick overview
- Alphabet (Google) faced its largest single-day stock drop in history, plummeting 13%.
- The company’s advertising revenue of $63.35 billion fell short of analyst expectations, raising concerns about growth.
- For the second consecutive quarter, Alphabet reported negative free cash flow, a first in its public history.
- Wall Street reacted by adjusting price targets for Alphabet, with JPMorgan and Goldman Sachs both lowering their estimates.
Alphabet (Google) experienced its worst single-day stock decline in company history, dropping 13%%. This drop eclipsed its previous record single-day declines: -11.63% on March 16, 2020 (at the onset of the COVID-19 pandemic) and -11.61% on September 29, 2008 (during the global financial crisis).
Google’s core Search & Other advertising revenue came in at $63.35 billion, missing Wall Street analyst expectations. This sparked renewed investor concerns regarding core ad revenue growth and competitive pressures.
Free cash flow fell into negative territory for a second consecutive quarter a financial milestone that had never occurred previously in Alphabet’s history as a public company.
Wall Street expressed anxiety about escalating spending on AI infrastructure and data centers. The aggressive capital allocation is squeezing margins faster than immediate AI revenue streams are offsetting the costs.
Major financial institutions promptly adjusted their estimates following the report: JPMorgan cut its price target from $425 to $375. Goldman Sachs: Lowered its 12-month target from $435 to $385 (while retaining a “Buy” rating).
Olumide Adesina
Financial Market Writer
Olumide Adesina is a French-born Nigerian financial writer. He tracks the financial markets with over 20 years of working experience in investment trading
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