What happened

Shares of Alphabet (GOOG -1.96%) (GOOGL -1.97%) were sliding last month, falling in line with the broader market on worries about the expanding coronavirus outbreak.

There was no major news about the search giant during the month, but the strength of Alphabet's advertising business is highly correlated with the overall economy. With the massive economic shock caused by the COVID-19 pandemic, investors assumed Alphabet was losing business.

A book showing different Google doodle designs.

Image source: Alphabet.

According to data from S&P Global Market Intelligence, the stock fell 13% in March. As you can see from the chart below, Alphabet's movements tracked closely with the S&P 500. 

^SPX Chart

^SPX data by YCharts.

So what

Google was one of the first major companies to tell workers to stay home, making the announcement on March 10, a sign of the challenges ahead.

Though the company has not offered any significant insight into its business performance during the COVID-19 outbreak, rival  Facebook (META -10.56%) provided some useful color. The social-networking giant said that traffic had surged on its sites but it saw a "weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19." The same is likely true for Alphabet, as the two companies rely on many of the same advertisers to drive business. With consumers largely stuck at home, avoiding most discretionary purchases, there's no reason for such businesses to advertise.

Alphabet, however, does have a silver lining. Demand for Google Cloud services have ramped up, especially its video-conferencing product, Google Meet, which has seen usage jump 25 times from where it was in January. It's also rolled out Google Classroom to 1.3 million students in New York City to help facilitate remote learning. 

Now what

Though Alphabet is clearly vulnerable to the pullback in advertising, it shouldn't suffer any long-term impact. It's one of the biggest companies in the world, has a fortress-like balance sheet with $120 billion in cash and marketable securities, and essentially holds a monopoly in online search.

The company could even emerge from the crisis in a stronger position, as it could make some acquisitions on the cheap and gain market share in some of its key growth areas. A further pullback in the stock could present a buying opportunity.