Alphabet stock suffers worst day in 20 years on AI spending fears

Alphabet, which owns Google and YouTube, just suffered its worst day in more than 20 years. Class A shares of the tech giant fell 12.6% on Thursday after the company reported slower growth for the summer than Wall Street analysts expected. The historic drop dragged the S&P 500 down 0.3% for its first loss in four days, overshadowing a broad market rally where four out of every five stocks in the index actually climbed.

Alphabet burned through more cash during the latest quarter as purchases of property and equipment topped $51 billion, according to Fortune. The report underscored growing investor anxiety over whether billions of dollars poured into artificial intelligence data centers and chips will ever produce the expected profits.

Wall Street is also questioning how long companies can sustain such heavy spending as the cost of borrowing money remains high. The tech-heavy Nasdaq composite tumbled 1.4%, while the Dow Jones Industrial Average dropped 132 points. Other major companies fared much better on Thursday, including DoorDash, which surged 5.6% after announcing a $17 billion deal to buy Instacart.

Eli Lilly climbed 6.6%, Mastercard rose 4.2%, and Norwegian Cruise Line Holdings jumped 13.4% after beating profit expectations. For your retirement accounts and investments, the massive tech sell-off shows just how nervous Wall Street has become about the real-world payoff behind the artificial intelligence boom.

When the biggest companies on the exchange catch a cold, even a strong day for everyone else cannot stop the market from sneezing.

Photo: Austin McKinley, CC BY 3.0, via Wikimedia Commons