Google’s share price has had its biggest fall in nearly seven years, wiping $70bn (£54bn) off its market value, after disappointing sales figures sparked investor fears that advertisers have been shifting their business to digital rivals such as Facebook and Amazon.

Shares in Alphabet, the parent company of Google and YouTube, fell at one point by more than 8% on Tuesday, the biggest fall since October 2012, after the company produced first quarter results on Monday that were worse than expected.

Its stock market value fell from more than $900bn to about $830bn by close of trading in New York. The company reported a 17% increase in revenue, to $36.3bn – its slowest revenue growth over a three-month period since 2015.

In a call with investors late on Monday, Google’s chief executive, Sundar Pichai, said the company would continue to invest more in algorithms to monitor content on YouTube, following recent incidents of the platform offering advertising slots alongside misinformation, hate speech and disturbing content targeting children. He also promised to continue working on user privacy concerns.

Google advertising revenue rose by 15% to $30.7bn, down on 24% growth a year earlier.

Alphabet’s performance was poor compared with its main tech rivals such as Facebook, which reported record revenue growth to more than $15bn in the first quarter, and Amazon, which has recorded four straight quarters of record profits.

Microsoft also had impressive first-quarter results, beating sales and profit expectations and becoming the third listed US firm to be valued at $1tn.

Last summer, $119bn was wiped off Facebook’s market value, the biggest ever one-day drop in a company’s value, after it reported that user growth had slowed following the Cambridge Analytica scandal.

Michael Nathanson of analysts MoffettNathanson said that, as was the case with Facebook, Google’s slower growth could be a blip rather than “some early flashing red light” that would force “conventional wisdom to be rethought”.

He added: “We expect that much will be made of company commentary that YouTube clicks decelerated in the quarter, and that improving YouTube’s environment is a top priority, as evidence that YouTube was to blame for the slowdown.”

Last month, Google was fined €1.5bn (£1.3bn) by European regulators for abusing its monopoly in online advertising, bringing the total fines imposed on it by Brussels to €8.2bn in the past two years.

“Another EU fine won’t have washed well with investors, but in reality it’s not the cheque on its way to Brussels that’s causing the shares to drop,” said George Salmon, an equity analyst at Hargreaves Lansdown.