WS #16509
Alphabet shares plunged over 11% after missing Q3 estimates, driven by concerns that AI monetization is lagging behind massive capital expenditures. The situation was exacerbated by reports that Microsoft and Google are both pulling back on raising their AI capex forecasts, marking a significant shift from the previous 'AI Capex Boom' narrative. This suggests the market is now pricing in a 'cash-flow test' for AI, where investors demand sustainable earnings rather than endless spending. The selloff in GOOGL is dragging down the broader tech sector, particularly high-multiple growth stocks.
AI Profitability Crisis
Alphabet shares plunged over 11% after missing Q3 estimates, driven by concerns that AI monetization is lagging behind massive capital expenditures. The situation was exacerbated by reports that Microsoft and Google are both pulling back on raising their AI capex forecasts, marking a significant shift from the previous 'AI Capex Boom' narrative. This suggests the market is now pricing in a 'cash-flow test' for AI, where investors demand sustainable earnings rather than endless spending. The selloff in GOOGL is dragging down the broader tech sector, particularly high-multiple growth stocks.