Alphabet, the parent company of Google, lost more than $500 billion in market value as its shares fell as much as 13 per cent on Thursday, the worst single-day performance for the Google parent company, after it reported slowing search revenue growth. In Australia, Coles shares plunged 10 per cent, wiping about $3 billion from its market value, after the supermarket chain said it expected flat first-half supermarket profits.
An analyst wrote that Alphabet’s miss ‘elevates the fear around AI and agentic taking share from Search and YT and hurting their AI monetization narrative,’ intensifying scrutiny of hyperscalers’ big spending. Capital providers’ terms on AI debt deals were tougher this week, and one Wall Street executive said: ‘I won’t say they were dumb until four weeks ago, but… they’ve gotten a lot smarter, fast.’
Coles chief executive Leah Weckert said customers 'are really feeling the pressure on their household budgets'. 'They're really seeking out value now by buying more specials and they're using their loyalty points,' she added. 'As we come into Christmas...there will be more meals eaten at home, less going out.' The supermarket chain's sales revenue grew 3.6 per cent to $10.3 billion in the September quarter, supported by eCommerce growth but partly offset by stronger competition and promotional activity.
Citi analyst Adrian Lemme said Coles’ guidance of flat profits in the supermarket business, compared with Citi’s previous forecast for 8 per cent growth, pointed to a loss of momentum against Woolworths. ‘The downgrade appears to be driven by price investment as supermarket sales have clearly been impacted by Woolworths’ pricing strategies,’ Lemme said. Coles flagged that customers remain value-conscious, cross-shopping across retailers, and that high fuel costs would add to its expenses in the coming months.
Analysis
Why This Matters
- Alphabet's record loss signals that investors fear AI is eroding the company's search-advertising monopoly, potentially reshaping the tech industry's revenue models.
- Coles' profit warning shows how cost-of-living pressures and aggressive competition are squeezing supermarket margins, with implications for grocery prices and shareholder returns.
- Both events reflect a broader market reassessment of large companies' ability to sustain growth amid technological and economic headwinds.
Background
Alphabet, the parent company of Google, dominates online search advertising but faces rising competition from AI-powered search tools and chatbots that could bypass traditional search results. Its heavy spending on AI infrastructure has drawn scrutiny from investors and capital providers.
Coles is one of Australia's two dominant supermarket chains, locked in a long-running rivalry with Woolworths. Cost-of-living pressures have made shoppers more price-sensitive, intensifying competition between the two retailers on pricing, promotions, and loyalty programs.
Key Perspectives
Coles CEO Leah Weckert: said customers feel budget pressure and are seeking value through specials and loyalty programs, with more meals eaten at home.
Citi analyst Adrian Lemme: attributed Coles' profit downgrade to Woolworths' pricing strategies, which have captured market share.
One analyst (quoted by Semafor): wrote that Alphabet's slower search growth 'elevates the fear around AI and agentic taking share from Search and YT'.
A Wall Street executive: said capital providers have 'gotten a lot smarter, fast' about the risks of AI spending.
What to Watch
- Coles' first-half profit results and whether it can regain momentum against Woolworths.
- Alphabet's next earnings report and any changes to its AI monetisation strategy.
- Whether other major tech companies report similar pressure on search-related revenue.
Checked
12 claims in this story checked against 2 sources: 11 supported.
Show each claim
- SupportedAlphabet lost $500 billion in market value.Semafor: “Alphabet’s shares fell as much as 13% Thursday, erasing more than $500 billion in market value”
- SupportedColes shares plunged 10 per cent.Brisbane Times - Latest News: “Shares in the supermarket giant plunged 10 per cent shortly following its latest quarterly results”
- SupportedThe Coles share fall wiped about $3 billion from its market value.Brisbane Times - Latest News: “a share price plunge that wiped about $3 billion off the company’s market value”
- SupportedAlphabet reported slowing search revenue growth.Semafor: “after it reported slowing search revenue growth”
- SupportedCiti analyst Adrian Lemme said Woolworths’ pricing strategies had impacted Coles supermarket sales.Brisbane Times - Latest News: “‘The downgrade appears to be driven by price investment as supermarket sales have clearly been impacted by Woolworths’ pricing strategies,’ Lemme said.”
- SupportedAlphabet shares fell as much as 13 per cent on Thursday.Semafor: “Alphabet’s shares fell as much as 13% Thursday”
- SupportedAn analyst wrote that Alphabet’s miss “elevates the fear around AI and agentic taking share from Search and YT and hurting their AI monetization narrative”.Semafor: “Alphabet’s miss “elevates the fear around AI and agentic taking share from Search and YT and hurting their AI monetization narrative ,” one analyst wrote”
- SupportedA Wall Street executive said, “I won’t say they were dumb until four weeks ago, but… they’ve gotten a lot smarter, fast.”Semafor: “as one Wall Street executive put it: “I won’t say they were dumb until four weeks ago, but… they’ve gotten a lot smarter, fast .””
- SupportedColes chief executive Leah Weckert said customers “are really feeling the pressure on their household budgets”.Brisbane Times - Latest News: “”Customers are really feeling the pressure on their household budgets,” Coles chief executive Leah Weckert said on a media call following the results.”
- SupportedWeckert said customers were seeking value by buying more specials and using loyalty points.Brisbane Times - Latest News: ““They’re really seeking out value now by buying more specials and they’re using their loyalty points.”
- SupportedWeckert said more meals would be eaten at home and fewer people would go out as Christmas approached.Brisbane Times - Latest News: “As we come into Christmas...there will be more meals eaten at home, less going out.””
- Partly supportedColes’ sales revenue grew 3.6 per cent to $10.3 billion in the September quarter.Brisbane Times - Latest News: “Coles’ supermarkets sales revenue grew 3.6 per cent to $10.3 billion in the three months to September”