Why Shares of Alphabet Stock Sank 17.5% Last Month

Alphabet shares dropped 17.5% last month, even after a Q3 report showing 25% revenue growth and $127.6B in total revenue. GOOGL and GOOG holders absorbed the hit as the market priced in threats that the earnings print did not erase.

The selling traces to three concerns. First, investors worry Google Search is losing market share to AI competitors, specifically ChatGPT and Claude. Second, Q3 capital expenditures hit $51B, which pushed free cash flow negative. Third, uncertainty persists over whether AI features can generate advertising revenue comparable to traditional search.

Against that, the pullback has reset the valuation. The stock now trades at 21x EV/EBIT, a cheaper multiple than before the drop. Google Cloud is growing 103% year-over-year, a figure that stands apart from the search-share debate.

Interpretation: the market is separating current results from future earning power. Strong top-line growth did not offset the capex burden and the unresolved monetization question, so the sell-off reflects a repricing of risk rather than a miss.