Wall Street Sends Google a Message

Maybe, just maybe, big tech firms need to do a better job of explaining their AI investment strategies. Shares of Google parent Alphabet fell 7% on Thursday after the company disclosed a further increase in capital expenditures this year—money it will spend on new AI chips, servers and data centers. The drop all but wiped out the gains the stock had enjoyed so far this year.

Sure, the entire stock market sold off, presumably as a result of rising oil prices and the intensification of the Iran war. But Alphabet was among the worst hit, along with Tesla, which also reported sharply higher capex on Wednesday and whose shares fell 15% on Thursday. It’s tough to consider Tesla’s stock valuation on any kind of rational basis, given that it trades based more on its connection to Elon Musk than reality. But Alphabet is a different animal.