Alphabet, Google’s parent company, and several other Silicon Valley giants are having a rough week on Wall Street.
Shares of major tech companies have plunged in recent days as investors grow increasingly concerned about how much money they’re spending on AI and when and if those investments will pay off.
Alphabet, for example, had its worst day ever on the stock market Thursday, with shares plunging more than 12% and wiping roughly $500 billion off the company’s market capitalization.
The dramatic selloff came a day after Alphabet reported disappointing third-quarter earnings. The tech giant reported Wednesday after the market closed that it generated $127.6 billion in revenue, falling short of Wall Street’s expectations.
And while Alphabet CEO Sundar Pichai said in a statement that the company’s AI investments helped drive overall growth in Google Search queries, revenue from its search business increased just 12%, also below expectations.
Alphabet Chief Business Officer Philipp Schindler told investors during an earnings call Wednesday that the growing use of Google’s AI Mode was contributing to slower search revenue growth because of “lower monetization.”
The company also reported $9.1 billion in negative free cash flow for the quarter, meaning its capital expenditures exceeded the cash generated by its operations. This marked the second consecutive quarter Alphabet reported negative free cash flow.
On top of all that, Alphabet still plans to spend a whopping $195 billion to $205 billion on capital expenditures this year, much of it going toward AI and the infrastructure needed to power it.
All of that has left investors antsy about how long it will take for Alphabet’s massive AI investments to start paying off.
And Google isn’t the only tech giant facing growing scrutiny over its AI spending.
Meta shares fell 7% last Thursday after the Facebook parent company revealed plans to spend even more money on AI. Meanwhile, Amazon shares tumbled as much as 7% in premarket trading Friday after its latest earnings report.
But one of the hardest-hit tech stocks Friday was Intel. Shares of the U.S. chipmaker plunged nearly 30% Friday afternoon, putting it on track for its worst day on Wall Street in more than 50 years.
Intel, founded way back in 1968, was once America’s leading computer chip company. But in recent years, it has fallen behind rivals like Nvidia and AMD during the AI boom. Its foundry business, where Intel manufactures custom chips for outside clients, has also faced stiff competition from Taiwan Semiconductor Manufacturing Company, better known as TSMC.
The company made headlines last year after the Trump administration acquired a roughly 10% stake in Intel. The administration has since pushed for additional deals to support the chipmaker’s turnaround. Despite those efforts, Intel is still struggling.
The company said Thursday that it expects to generate between $15 billion and $16 billion in revenue during the fourth quarter, well below the roughly $17 billion analysts anticipated.
The weak forecast is partly due to a slowdown in PC sales and an explosion at an Intel manufacturing facility in Israel earlier this month. The company estimates the incident will cost it roughly $600 million in lost revenue over two quarters.
“Looking ahead, we see the PC slowdown continuing at least through the first half of next year, but we remain optimistic about the opportunities across our broader portfolio, and we will continue making disciplined investments in capacity and working capital to increase supply and support future growth,” Intel CFO David Zinsner said in a press release.
Alphabet and Intel did not immediately respond to requests for comment.
