Alphabet Inc. (GOOGL.O), the parent company of Google, saw its shares tumble by 8% on Wednesday as investors reacted negatively to slowing cloud business growth and the company’s massive $75 billion capital expenditure (CapEx) plans for 2025. This sharp decline put Alphabet on track to lose approximately $180 billion in market value, wiping out all of its stock price gains for the year.
The disappointing cloud revenue figures and escalating AI investment costs have amplified investor concerns about the long-term profitability of Big Tech’s artificial intelligence race. The news also had a ripple effect on the market, dragging down shares of cloud rival Amazon.com (AMZN.O), which is set to release its earnings report on Thursday.
Cloud Growth Slows, Raising Profitability Concerns
Alphabet reported a 30% year-over-year increase in cloud revenue, down from the 35% growth seen in the previous quarter and below Wall Street expectations. This decline mirrors similar trends at Microsoft (MSFT.O), Alphabet’s key competitor in the cloud industry.
Despite strong performance in Google’s advertising sector, the shift towards AI-driven cloud computing has put the company on a capital-intensive trajectory, raising red flags among investors. Analysts argue that Google is moving away from its historically high-margin, capital-light search advertising business into a more competitive and costly AI market.
