Shares of Google parent Alphabet suffered their biggest drop since going public on the 29th (local time), weighed down by sluggish search monetization and growing concerns over artificial intelligence (AI) investments.

Alphabet plunged 12.6% on the Nasdaq to close at $283.82, with losses extending by another 0.9% in after-hours trading.

The drop wiped out $500 billion (approx. 669 trillion won) in market capitalization in a single day, marking the second-largest daily market cap loss in Wall Street history, following Nvidia ($593 billion) in January of last year, according to the Financial Times.

The downturn was driven by third-quarter search and advertising revenue falling short of expectations, fueling concerns that AI is threatening core businesses and that record-high AI investments are failing to yield tangible results.

Google search revenue rose 12% to about $63 billion, missing market expectations of around $65 billion.

The growth rate of paid search clicks slowed from 13% in the second quarter to 8%.

While CEO Sundar Pichai stated that search query growth is at its fastest pace in five years, Chief Business Officer Philipp Schindler explained that AI-mode queries have "lower monetization levels," impacting revenue.

Alphabet also posted a free cash flow (FCF) deficit of $9.1 billion (approx. 12.2 trillion won), marking its second consecutive quarter in negative territory for the first time since going public, further heightening investor anxiety.

The quarterly report filed by Alphabet on the same day also revealed risks that were not apparent during the earnings announcement.

According to Bloomberg, aside from more than $1 trillion in obligations such as purchase commitments and future leases disclosed by CFO Anat Ashkenazi, contingent liabilities that could be incurred under certain conditions reached about $98.5 billion (approx. 132 trillion won), an increase of some $23 billion from the previous quarter.

Google Cloud's remaining performance obligation stood at $560.8 billion (approx. 750조 원) at the end of September, up from $513.9 billion three months earlier. However, more than a third of the increase ($16.8 billion) came from a multi-year contract with CruxAI, a joint venture established by Alphabet and Blackstone.

Alphabet holds a minority stake in CruxAI and has promised up to $10 billion in data center and energy guarantees.

The report classified the company as a related party.

The shock from Alphabet spread across the broader market.

The Nasdaq fell 1.4%, and the Philadelphia Semiconductor Index (SOX) dropped 1.4%, ending its four-session winning streak.

(Photo: AP, Yonhap News)