Why Shares of Alphabet Stock Sank 17.5% Last Month

Alphabet's stock fell 17.5% despite strong Q3 earnings (25% revenue growth, $127.6B total revenue) due to investor concerns about Google Search losing market share to AI competitors like ChatGPT and Claude. Additional worries include $51B in Q3 capital expenditures leading to negative free cash flow and uncertainty about monetizing AI features compared to traditional search advertising. However, the stock now trades at a cheaper valuation (21x EV/EBIT) and Google Cloud is growing rapidly at 103% year-over-year.