For years, Google executives have argued that AI chatbots and features won’t cut significantly into its search business, but investors have worried about AI’s impact. | REUTERS

Alphabet’s shares fell more than 13%, erasing more than $500 billion in its biggest-ever market plunge, after the company reported disappointing search and advertising sales that reinforced investor concerns about AI’s threat to its core business.

The Google parent reported sales, excluding partner payouts, of $111.2 billion for the third quarter, falling short of analysts’ projections.…