Alphabet Plunges 10-13% on Q3 Earnings; AI Capex and Weakening Search Ad Growth Trigger Tech Selloff
Alphabet dropped its worst day on record (~$280-500B loss) after Q3 results showed strong cloud growth but negative free cash flow and surging AI capex. Amazon and Intel missed estimates, sparking Nasdaq futures declines (~2%) and rotation out of AI names.
TLDR
The earnings results intensify debate over whether massive AI investments ($750B+ planned industry-wide) are delivering sufficient returns. With US inflation sticky at 3.6% PCE and Federal Reserve rate hike odds rising for December, the selloff signals potential valuation resets for hyperscalers and a broader shift toward 'cash is king' sentiment. The rotation away from mega-cap tech names raises questions about the sustainability of the AI trade and could reshape market composition if the trend persists.
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