Alphabet selloff intensifies fears over AI spending

Google parent Alphabet suffered a historic market rout Thursday as investors questioned whether its massive AI investments would deliver sufficient returns. Class A shares closed at $283.82, down 12.64%, erasing approximately $499.8 billion in market capitalization, according to The Wall Street Journal. The decline marked the second-largest single-day market value loss in stock market history.

Alphabet reported quarterly revenue of $127.6 billion, up 25% from a year earlier but below Wall Street expectations. Its core Google Search business grew 12%, compared with 17% in the previous quarter, raising concerns about slowing advertising growth as AI-powered search tools reshape the market. Capital expenditures reached approximately $51.4 billion during the quarter, much of it directed toward data centers and computing infrastructure.

The pressure spread across technology stocks following disappointing earnings from Intel and Amazon. Intel shares fell 28% Friday as the chipmaker warned that weak personal computer demand would persist into next year. Gartner reported worldwide PC shipments fell 22.4% from a year earlier as rising memory costs forced manufacturers to increase prices. Amazon shares declined 7% in premarket trading as its own AI infrastructure spending accelerated.