The day after Google reveals its frontier AI model Gemini 4 Carbon, Wall Street hands Alphabet its worst stock day ever.

By many accounts, Alphabet remains more resilient than many prominent voices had predicted after the explosion of genAI. In December 2022, Gmail creator Paul Buchheit warned that Google could be “a year or two away from total disruption” as AI displaced the search-results page underpinning its advertising business. Nearly four years later, Alphabet’s Oct. 28 earnings release showed Google Search and other business unit generating $63.35 billion in quarterly revenue, up 12%, accounting for almost half the company’s sales. Chief Executive Sundar Pichai said AI was helping drive Search’s fastest year-over-year query growth in five years.

But Alphabet’s shareholders were apparently not impressed. On Oct. 29, its Class A shares fell 12.6%, their worst day on record. The decline erased roughly half a trillion dollars in market value, the second-largest one-day loss for a U.S.-listed company, behind NVIDIA’s roughly $593 billion plunge on Jan. 27, 2025, when DeepSeek’s AI advances rattled investors.

The selloff followed disappointing search results and increasing capital expenditures, with Alphabet reporting negative free cash flow of $9.07 billion in the most recent quarter. Analysts had expected a roughly $2.7 billion shortfall. Some analysts also questioned Google’s standing in the AI race itself. Ben Barringer, global head of technology research at Quilter Cheviot, told CNBC that Google faces an innovator’s dilemma, unsure whether to protect its core business or join the disruption. “As such, Google has lost its edge with Gemini and is behind peers on agentic AI,” he said.

Search revenue growth slowed from 17% in the second quarter to 12% in the third, while Google Cloud revenue more than doubled to $30.7 billion. “Major concerns about search. Major concerns about that negative free cash flow coming in so big,” Schwab Network’s Marley Kayden said in an Oct. 29 earnings segment. Earlier in the segment, Kayden reported that Citizens downgraded Alphabet, citing competition from AI agents and “significant execution risk ahead as it transitions search monetization.”

Alphabet had already reported negative free cash flow of $5.9 billion in the second quarter, when capital expenditures reached $44.9 billion. In the third quarter, spending on property and equipment climbed to $51.4 billion, exceeding operating cash flow of $42.3 billion. The company also raised $28.7 billion through senior notes and $12.4 billion through sales of Class A and Class C shares during the quarter. Earlier, on Feb. 10, Alphabet sold a £1 billion, 100-year sterling bond, the technology sector’s first century bond since Motorola’s in 1997, as part of a global debt offering totaling almost $32 billion.

Alongside its earnings announcement, Google unveiled Gemini 4 Carbon, which leads Artificial Analysis’s composite Intelligence Index. Its lead is not universal: Carbon ranks fourth by point estimate on Arena’s web-development leaderboard, where its results remain preliminary. But it gives Google a stronger claim to competing at the frontier, even as access initially remains restricted to selected cybersecurity defenders.

In addition, in an Oct. 15 preprint, Google DeepMind and University of Cambridge researchers described a Gemini-based system that discovered and formally verified mathematical rules for 11 previously unanalyzed theoretical computing machines.