Shares of Google parent company Alphabet sank Thursday by 12.6%, marking the stock’s worst one-day drop ever and wiping out $500 billion in market value.

Alphabet is America’s fourth-largest company, worth a total of $3.47 trillion.

The market value it shed in Thursday’s trading session ranks as the second-worst one-day wipeout in U.S. market history, trailing only Nvidia’s $589 billion drop in late January of 2025.

It was also the latest sign of broader anxiety across Wall Street over how long it will take big artificial intelligence companies to see consistent returns on investments worth hundreds of billions of dollars.

Late Thursday afternoon, Amazon’s stock appeared to be on track to meet a similar fate to Alphabet’s. The company reported third quarter revenues after the bell that fell short of Wall Street’s expectations. Its shares quickly slid by 10% in after-hours trading.

Alphabet had reported its latest quarterly financial results on Wednesday, revealing that revenues were less than what had been anticipated and surprising investors.

It also reported lackluster advertising sales.

The “magnitude” of the slowdown in Google’s search business was “steeper than expected,” JPMorgan Chase analysts wrote in a Thursday morning note.

A senior Alphabet executive told investors Wednesday that part of the reason ad revenues from search were underperforming was because of Google’s own “AI Mode” search feature, which was resulting in fewer ads.

The company is working on addressing this, senior vice president Philipp Schindler said on the investor call, adding that “ad experiments” in the feature have “shown promising results.”

Company executives tried to soften the blow for investors by touting more than 1 billion users of its Gemini AI app.

But all that AI is coming at a massive cost to Alphabet, which disclosed that it has committed to more than $1 trillion worth of multiyear spending agreements to fund the infrastructure, energy and leases required to run AI systems.

The company said during its July earnings report that it planned to spend more than $200 billion this year, which is double what it spent in 2025. The company in June also raised almost $80 billion in capital, also to spend on the ever-expanding AI build-out.

Alphabet’s disappointing results also came against the backdrop of better results from its peer Microsoft, whose shares initially rose in after-hours trading Wednesday before reversing course to end the day Thursday effectively flat.

The big drop in Alphabet shares dragged down the Nasdaq Composite index, which closed down 1.38%. The S&P 500 fell slightly less, by about 0.3%.

Shares of chip companies that supply equipment for AI data centers followed Alphabet shares lower, with the Philadelphia semiconductor index dropping 1.4%.

The bleeding even spread beyond the tech sector, as shares of construction equipment giant Caterpillar — a key supplier of the machines required to build data centers — plunged 9.2% on Thursday.

Caterpillar’s recent earnings report revealed that the company’s revenues beat Wall Street expectations but by less than many traders had hoped.

The sharp drop in its share price that followed made the industrial giant the day’s second worst performing stock in the Dow Jones Industrial Average, behind only Alphabet. The Dow declined slightly more than 130 points for the day.

As investors clamor for ever-higher returns from companies linked to the costly AI build-out, stock in firms that only narrowly top earnings targets, like Caterpillar did, has been getting punished in dramatic sell-offs.