Shares of Google parent Alphabet sank close to 13% early Thursday after the tech giant reported lower-than-expected profit and a slowdown in its advertising business, while it maintained a big pledge on spending on artificial intelligence.

About five minutes into trading, Alphabet's share price stood at $279.43, down 13.2% as all three major U.S. stock indices were stuck in the red despite stronger-than-expected U.S. economic growth data.

The shares were on track for their steepest one-day fall on record, after the company reported disappointing search advertising results and a surge in cash burn as AI-related spending accelerated.

The Google parent was on track to lose more than $500 billion in market value.

"The positive AI effects must stay intact for years to come, or investors in Alphabet (and other ​hyperscalers) will eventually re-rate the multiples as the bottom-line profits fade," said Anders Bylund, tech analyst at The Motley ⁠Fool.

Microsoft also edged 0.5% lower following media reports the company is planning to raise at least $25 billion through its first U.S. investment-grade bond sale in ​more than nine years.

The company on Wednesday delivered a big cash-flow beat and forecast strong cloud growth.

Renewed AI worries

Investor enthusiasm for AI trade has been tempered ​this month by worries that debt-fueled spending will be harder to justify as borrowing costs climb. Anthropic's disclosure of U.S. initial public offering (IPO) filing on Monday offered a short-lived reprieve, before those fears resurfaced.

Alphabet is one of the most influential stocks on Wall Street because it's one of the largest, and its 12.2% drop during the day was on track to be its worst since it began trading more than 20 years ago.

It was under heavy pressure to at least meet analysts' expectations for growth amid concerns about how much it's spending to invest in AI.

Alphabet said late Wednesday that it burned through more cash during the latest quarter, according to a measure called free cash flow, after its purchases of property and equipment topped $51 billion.

Such worries are weighing on the entire AI industry following a frenzy to build data centers and fill them with AI chips. Not only are concerns high that the AI revolution may not produce as much profit and productivity as hoped, future spending is also under pressure because of how expensive it's become to borrow money.

If not for Alphabet's drop, the S&P 500 would have been higher for the day.

Several companies rallied after reporting stronger profits for the summer than analysts expected, including KLA Corp. The company, whose equipment helps make semiconductors, rose 6.4%.

Eli Lilly climbed 7.8%, Mastercard rose 4.7% and Merck added 5%.

Outside of earnings reports, DoorDash rose 5.8% after saying it agreed to buy Instacart for $65 per share.